RY: Can you Bank on their return to Glory?

The Royal Bank of Canada(TSX:RY) has had a rough year and there stock has taken a beating. 

But going forward what is in store for RBC?

Take a look in this week’s Stock Analysis section.

Description

Royal Bank of Canada (RBC) is a diversified financial services company and provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services. The Company operates through five business segments: Canadian Banking, Wealth Management, Insurance, International Banking and Capital Markets.

 

The Financial Basics

RBC

Grade

Price $54.71 -
52 Week Low $48.85

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52 Week High $61.53

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Yield 3.95%
Payout Ratio 52%
P/E 14.32
Ex-dividend date 7/22/11 -
5 Year Dividend Growth Rate 11.13%

As you can see from the Royal Bank’s financial basics above there are some great things that you can notice right away about the company.  The yield is almost 4% while the payout ratio is only 52%, both of these are great signs that the company has the ability to start growing its dividend again. As well you can see from the dividend chart below that RY held its dividend constant from 2007 to 2010 however last quarter RY announced its first dividend hike since October 2007.   Although the market hammered RY for missing analysts’ estimates the fact that the company is now in a position to start raising dividends again is a great sign.

Unfortunately the stock price has seriously under-performed its peers over the past 12 months, remaining almost perfect flat. However it is important to remember that stock that have temporarily under performed are usually the best place to look for bargains.

Charts


 

 

 

 

 

 

 

 


 

 

 

 

 

 

Analysts Estimates

According to Morningstar.com the average analyst rating for royal bank is a 1.8 (1=Buy; 2= Hold; 3=Sell).

Conclusion

Royal Bank is a stable blue chip that will continue to growth their dividend in the future. The company is well managed and with a dividend payout ratio of 52%.  However that being said the analyst estimates on the street appear to be stuck as hold.  As a dividend and deep value investor I would love to own RY but I’m looking for it at a cheaper price.  My entry point for this stock is below $50, closer to its 52 week low. So for now I will patiently wait and hope that the stock keeps falling.

Disclaimer

The articles posted on this website are the opinions of the author and should not be considered financial advice. The tools that I present on this website have worked for me but I am not a financial professional. Please consult and a qualified financial advisor before making any financial investments.

The author of this article does not own share in RY

 

 

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