Royal Bank of Canada

Sound bite for Twitter and StockTwits is: Buy for dividends/growth. This stock is good for both dividends and growth. It is a bit expensive at present, so I am rather neutral on this stock. See my spreadsheet on Royal Bank of Canada.

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). At the time I bought this stock it was on Mike Higgs' list of Canadian Dividend Growth Stocks and on the dividend lists I followed as were all the banks. In 1995 I bought this stock and this is the second bank stock that I have bought.

Banks can be good money makers. They tend to have good yields and moderate dividend growth. Dividends grow very well over time. I have had this stock for almost 21 years and I am making a yield of 45.7% on the original cost of my stock. This is almost the same as BMO but over less time. Also the dividends received have paid for my stock 440% or in other words over 4 times.

This stock has a dividend yield that is moderate to almost good and dividend growth that is moderate. The current dividend is 3.58% based on dividends of $3.32 and a stock price of $92.72. The historical median dividend yield is 3.92% and the 5 and 10 year median dividend yields are 3.92% and 3.93%, respectively. I think that any dividend above 4% is a good dividend, but this stock does not quite make that good category.

For me dividend growth has been at 11.4% per year over the past 21 years. Dividends growth has slowed lately. The 5 and 10 year dividend growth is at 9% and 8.9% per year. However, this is not unusual. We had a period of no dividend growth in 2009 and 2010. There was also a period from 1991 to 1994 inclusive when this stock had no dividend growth. Dividend growth will vary over time for any stock.

I have made a total return of 17.99% per year since I bought this stock. This is composed of capital gain at 13.34% per year and dividends at 4.65% per year. Growth over the past 5 and 10 years is not as good as it is at 16.02% and 8.85% per year. The portion of this growth attributable to dividends is at 4.52% and 3.64% per year. The portion of this growth attributable to capital gains is at 11.82% and 5.05% per year.

This bank has kept the Dividend Payout Ratio for EPS with the generally accepted range for banks of between 40 and 55%. The DPR for the financial year ending in October 2016 is 47.20%. For the past 5 years the DPR for this bank is 45.83%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.98, 11.33 and 12.46. The 10 year values are 10.93, 12.90 and 14.21. The historical values are 10.29, 12.58 and 14.21. P/E Ratios have been lower in the past 5 years than historically. The current P/E Ratio is 13.26 based on a stock price of $92.72 and 2017 EPS estimate of $6.99. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham price of $82.55. The 10 year low, median and high median Price/Earnings per Share Ratio are 0.95, 1.14 and 1.32. The current P/GP Ratio is 1.12 based on a stock price of $92.72. This stock price testing suggests that the stock price is relative reasonable and below the median.

I get a 10 year Price/Book Value per Share Ratio of 2.06. The current P/B Ratio is 2.14 a values some 3.7% higher. This current P/B Ratio is based on a stock price of $92.72 and BVPS of $43.32. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a current dividend yield of 3.58% based on dividends of $3.32 and a stock price of $92.72. The historical median dividend yield is 3.92% a value some 8.7% higher. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The most are in the Buy and Hold Categories. The consensus would be a Hold. The 12 month stock price is $90.98. This implies a total return of 1.70% with a capital loss of 1.88% and dividends of 3.58%.

Alexander John Tun in a late December post on Motley Fool asks if Royal Bank or TD Bank is a better buy and comes up with no clear winner. The staff at Wall Street Confidential Report says the stock has a Williams Percent Range of -28.87 where values can range from 0 to -100. A reading between -80 to -100 may be typically viewed as strong oversold territory. A value between 0 to -20 would represent a strong overbought condition. So it is neither overbought nor oversold but closer to overbought. See what analysts are saying about this bank at Stock Chase . Barry Schwartz says to wait for a pull back before buying Canadian Banks.

The last stock I wrote about was about was Bank of Montreal (TSX-BMO, NYSE-BMO)... learn more . The next stock I will write about will be Rogers Sugar Inc. (TSX-RSI, OTC- RSGUF)... learn more on Wednesday, January 11, 2017 around 5 pm. Tomorrow on my other blog I will write about Yield and Cost Coverage... learn more on Tuesday, January 10, 2017 around 5 pm.

Royal Bank of Canada 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 Royal Bank of Canada.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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