Wednesday, December 10, 2008

Royal Bank

I am reviewing this bank today as its annual statement for 2008 has been published. The Royal Bank (TSX-RY) is on Mike Higgs’ list at, on the Dividend Achievers list at, and on the Dividend Aristocrats list at (see indices). This bank has done much better than the Bank of Montreal and about the same as the Bank of Nova Scotia and slightly worse than the TD bank. I reviewed these banks this week and last week.

The revenue on this bank has been increasing over the last 5 and 10 years, both when looked at as absolute revenue increase and revenue per share, but not as well as I would like. The 5 year increase is just 4%, but this is mainly due to the decrease in earnings this year. The Earnings per Share (EPS) is also increasing, and the growth for the last 5 and 10 years is 9% and 9.7% per year, respectively and this is not bad.

The one thing that I really like is the increase in dividends over the last 5 and 10 years. The dividend growth for the last 5 and 10 years is 16% and 18% per year, respectively. However, this bank did not increase their dividends at all this year. I will get more dividends for 2008 as it the dividend was increase in October of 2007. I do not know when the dividend will be increased again.

I have held this bank since 1995, and I have made a return of 19.5% per year on this stock. This is because I have held it so long. The 5 and 10 year return on this stock, using the closing price and dividends paid are 8.3% and 13.5% per year respectively. These returns are not bad. Also, the increase in book value for the last 5 and 10 years is a very respectable 9.8% and 9.3% per year, respectively.

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

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.

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