Royal Bank of Canada

By the way I have started a spreadsheet on Industrial Alliance Insurance and Financial Services Inc (TSX-IAG, OTC- IDLLF). This is the second one I have added this year because of other stocks being dropped from my list.

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. Price is a bit high but not overly so. Very good long term return. My yield on my original stock price is 50.14% currently after 23 years. This is eye popping and a good reason to buy dividend growth stocks. 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. I still value this stock and consider it a core stock of my portfolio.

I have done even better on the Royal Bank than Bank of Montreal. I have had this bank for 23 years and my yield on my original stock price is an eye popping 50.14%. According to my spreadsheet, people who have had this stock for 25 years get a yield of 57% and for 30 years get a yield of 93% if they paid a median price for the stock. This is why you buy bank stocks for the long term.

The dividend yield is moderate with the current yield at 3.55% and the 5, 10 and historical median yields at 3.92%, 3.93% and 3.92% respectively. This is close to a good yield which I consider to be in the 4 to 5% range.

Dividend growth has been low to moderate over the past 5 and 10 years with growth at 8.15% and 6.17% per year for the past 5 and 10 years. Growth has been better in the past with the 15, 20, 25 and 30 year dividend growth at 10.10%, 11.14%, 10.65% and 9.20% per year.

The 5 and 10 year total return is at 15.37% and 10.86% per year. Even more impressive is the longer term total return with growth for 15, 20, 25 and 30 years at 12.71%, 12.35%, 16.50% and 17.03% per year. I have had this stock for 23 years and my total return is 17.97% per year with 12.68% from capital gains and 5.29% from dividends.

What this means that say I had invested $10,000 in this stock 23 years ago, my stock would be worth $141,390.11 today and I would have collected some $48,866.71 in dividends so far. However a warning is required because past returns do not guarantee future returns. Perhaps this bank will continue to show good returns or you may need to buy a smaller bank to get such returns. However, this does show the possibilities. And note that a lot of things can happen over 30 years. There will be all sorts of expansions and recessions happening.

I get 5 year low, median and high median Price/Earnings per Share Ratios of 10.51, 11.44 and 12.68. The corresponding 10 year ratios are 10.68, 12.39 and 13.68. The historical ratios are 10.40, 12.42 and 14.07. The current P/E Ratio is 12.91 based on a current stock price of $102.64 and 2018 EPS estimate of 7.95. This stock price testing suggests that the stock price is reasonable but above the median.

I get a Graham Price of $88.09. The 10 year low, median and high Price/Graham Price Ratios are 0.92, 1.08 and 1.19.The current P/GP Ratio is 1.17 based on a stock price of $102.64. This stock price testing suggests that the stock price is reasonable but above the median. It is almost to the relatively expensive range.

The 10 year median Price/Book Value per Share Ratio is 2.02. The current P/B Ratio is 2.21 based on Book Value of $67,416m, Book Value per Share of $46.41 and a stock price of $102.64. The current P/B Ratio is some 9.4% higher than the 10 year median. This stock price testing suggests that the stock price is reasonable but above the median.

The current dividend yield is 3.55% based on dividends of $3.64 and a stock price of $102.64. The historical median dividend yield is 3.92%. The current dividend yield is some 9.5% below the historical median. This stock price testing suggests that the stock price is reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 2.98. The current P/S Ratio is 3.64 based on 2018 Revenue estimate of $40,957M, Revenue per Share of $28.20 and a stock price of $102.64. The current P/S Ratio is some 11.4% above the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.

When I look at analysts' recommendations I find Strong Buy (3), Buy (6), Hold (5) and Underperform (3). The consensus would be a Buy. The 12 month stock price is $108.47. This implies a total return of 9.23% with 5.68% from capital gains and 3.55% from dividends.

Katy Gagnon on Analysts Buzz says with the Relative Strength Index (RSI) over 70 at 75.73, this stock is overbought. Note site is quoting in US$. Nicole Wilson on Ledger Gazette interestingly compares RBC and Farmers National Banc (NASDAQ:FMNB). See what analysts are saying about this bank on Stock Chase. They rather like it and most feel that it will continue to grow.

Royal Bank of Canada is one of the largest Canadian banks. It provides diversified financial services, personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services worldwide. Its web site is here Royal Bank of Canada.

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 Monday, January8, 2018 around 5 pm.

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.