Royal Bank
Royal Bank of Canada (TSX:RY)(NYSE:RY) is Canada’s largest bank and one of the top 15 around the globe.
The company reported adjusted earnings of $12.9 billion in fiscal 2019 and a robust $3.5 billion in fiscal Q1 2020. Return on equity was 17.6% in the quarter, and Royal Bank continues to maintain a strong capital position with a CET1 ratio of 12%.
The secret to the bank’s success lies in its diversified business lines operating in many locations. Royal Bank has strong personal banking, commercial banking, capital markets, wealth management, insurance, and investor and treasury services operations. Canada accounts for 62% of revenue. The U.S. provides 23%, and international operations add the remaining 15%.
Royal Bank just raised its quarterly dividend by 3% to $1.08 per share. That’s good for a yield of 5.5% at the current share price. Royal Bank trades below $79 per share at the time of writing. It was at $109 last month.
The sell-off appears overdone. The price-to-earnings multiple is now below nine, which is very cheap for one of the planet’s most profitable large banks.
Long-term investors have done well with the stock. A $10,000 investment in Royal Bank 20 years ago would be worth more than $100,000 today with the dividends reinvested.
Actionable Items
10 times more after 20 years. I do think that it is very good investment.
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