Royal Bank of Canada

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). In 1995 this is second bank stock that I have bought. Since buying this bank I have made a total return of 18.54% per year with 5.15% per year from dividends and 13.39% per year from capital gains. On my original purchase price I have a dividend yield of 36.9%.

This bank had three years of a level dividend, with their last dividend increase in 2008 and the first one 2011. The 5 year dividend growth is 4.23% per year and the 10 years dividend growth is at 11.08%. Prior to 2008 the dividend growth for the over the last 5 and 10 years was at 14.64% per year 15.58% per year. Since I bought this stock in 1995, by dividends have grown by 12.2% per year. This is over a period of 19 years.

Our Canadian Banks have performed very nicely for a very long time. Yes, they did have problems with the 2008 bear market, but they seemed to have done better than a lot of banks in a lot of other countries. I think that every Canadian should have some Canadian bank stocks in their portfolio if they want to build good dividend income over time.

The total return for RBC over the past 5 and 10 years is total return of 19.23% per year and 12.88% per year. The dividend portion of this total return is at 4.61% and 3.92% per year over these periods. The capital gain portion of this return is at 14.62% and 8.95% per year over these periods.

The outstanding shares have increased by 1.5% and 1% per year over the past 5 and 10 years. Shares have increased due to DRIP, Stock Options and Share Issues. The shares have decreased due to Buy Backs. Growth in revenue, earnings and cash flow over the past 5 and 10 years is good.

The Revenue has grown at 7.4% and 5.9% per year over the past 5 and 10 years. Revenue per Share has grown at 5.9% and 4.9% per year over the past 5 and 10 years. Earnings per Share have grown at 10.4% and 9.7% per year over the past 5 and 10 years. However, if you look at 5 year running averages, the growth in EPS is much lower at 4.4% and 8.2% per year. The Cash Flow per Share has grown at 7% and 7.8% per year over the past 5 and 10 years.

The Return on Equity has mostly been above 10% every year. The ROE for the financial year ending in October 2013 is 16.7% and the 5 year median is 12.7%. Generally speaking the ROE on comprehensive income is better than the ROE on net income. The ROE on comprehensive income for the financial year ending in October 2013 is 20%, a value that is almost 20% higher than for net income.

The debt ratios are fine. The Liquidity Ratio I get for this stock is 2.01. Most analysts do not much bother with this ratio for banks. The Debt Ratio is 1.06 and this is normal for a bank and a bit higher than before 2008. The Leverage and Debt/Equity Ratios at 17.10 and 16.10 are fine for a bank and lower than what they were before 2008. The 5 year median ratios were 20.73 and 19.73, respectively.

As with all my Canadian Bank stocks, I have done very well over the longer term with this stock. See my spreadsheet at ry.htm.

This is the first of two parts. Second part will be posted on Wednesday, January 15, 2014 and will be available here.

Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. They are one of Canada's largest banks as measured by assets and market capitalization, and are among the largest banks in the world, based on market capitalization. They provide diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. They have personal, business, public sector and institutional clients through offices in Canada, the U.S. and 56 other countries. Its web site is here RBC.

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 for stocks followed and investment notes. Follow me on Twitter or StockTwits.