Thursday, October 30, 2008

Royal Bank 3

This stock (TSX-RY) is one the stocks that has recently been recommended in this difficult time. The one negative that I have with this stock is that it has not raised its dividend this year. This stock, for many years, has raised their dividend twice a year. I will get move dividends this year as they raised their dividend in May and November 2007. Last year my average dividend was $1.82 and this year it will be $2.00.

Some people view the lack of dividend increases as a positive. The Royal Bank is using it’s free cash at this point to make purchases in a crisis. So, it is felt that this might be a better use of Royal Bank’s money than increasing dividends. They do have a point. The Royal Bank has also issued shares as a means of purchasing other financial entities.

The next negative I have on this stock is that there has been lots of insider selling. The selling has also been done by a number of officers of the company. The Royal Bank has been buying back shares recently. This is a sign that the company has some faith in this stock. However, I would feel better if the officers of the company had faith in it also and that they were not selling shares. There is about has many Strong Buys on this stock as there are Holds. This points to a wide variety of views on this stock.

Not much has changed on this stock since I last reported on it. The price is still lower than the Graham Price. The estimated EPS is still $4.27 for this year. The Accrual Ratio has come down, but it is still not negative. The P/E ratio at 11% is still below the 5 year average of 14.6%. The yield is still higher, at 4.26%, than the 5 year average of 3.18%. These are all positives.

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 See my spreadsheet at I am reloading my spreadsheet with the July 2008 figures.

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 for a list of the stocks for which I have put up spreadsheets on my web site.

No comments:

Post a Comment