Tuesday, August 19, 2008

Royal Bank

Since I have stated I will be investing in financial institutions, I decided to put up all my spreadsheets on financial institutions. I bought the Royal Bank in October 1995. Since that date, I have made an average annual return, including dividends, of 20.5%. Over the last 10 years I have made some 11.5% return per year. Over the last 5 years, I have made an average annual return of 13.5%.

Any stock that has returns of 8%, plus 2% dividends, for a total return of 10% per year is a great stock. With the Royal Bank, the dividends have added 3% per year to the return I received over both the last 10 years and the last 5 years. The returns in the first paragraph are to date, so they will vary from my spreadsheet, as the spreadsheet goes only to October of 2007.

The following values are all for the last 5 years to October 31, 2007. For this stock, the growth in Revenue is not great, but not bad either, at 5.4% per year over the last 5 years. The Earnings per Share (EPS) is much better at 16% per year, as is the increase in Closing Price at 19% per year. The increase in dividends at 19% per year is great. The increase in book value at 6.3% is ok.

The Cash Flow from Operations is rather meaningless for banks as it varies back and forth from a positive and negative figure. The Asset/Liability Ratio at 1.04% is normal for a bank. The Return on Equity (ROE) is great at 19.3% for last year and an average of 18.4% per year over the last 5 years. The Accrual Ratio at 4.6% in October 2007 is a little high.

But, as you can see, the returns on this stock are great and it is even better as a long term investment. You can invest and just let the dividend flow in. This is a long term investment. Tomorrow, I will look at this stock to see if it is a good investment today.

This is a bank. It provides personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. It operates in Canada, USA, Caribbean, and other places around the globe.

Its web site is www.rbc.com. See my spreadsheets on this company at www.spbrunner.com/stocks/ry.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on web site.

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