Topic: Dividend Stocks

ROYAL BANK OF CANADA $79 – Toronto symbol RY

ROYAL BANK OF CANADA $79 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $110.6 billion; Price-to-sales ratio: 3.8; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) earned $2.3 billion in its fiscal 2014 fourth quarter, which ended October 31, 2014. That’s up 11.0% from $2.1 billion a year earlier. Per-share earnings rose 12.9%, to $1.57 from $1.39, on fewer shares outstanding. Revenue improved 5.8%, to $8.4 billion from $7.9 billion.

Earnings at Royal’s Canadian and U.S. retail banking division (which supplied 52% of the total) rose 7.6% on strong loan growth and higher fee-based income. The securities trading division (18% of total earnings) saw its profits fall 14.3% on lower trading volumes, and costs to comply with new U.S. securities regulations.

The bank’s wealth management division (13%) reported 41.1% higher earnings, mainly because rising stock prices increased the value of its assets under administration. Insurance earnings (12%) jumped 139.3%, mainly because a charge related to new Canadian tax laws depressed the year-earlier earnings. Without this charge, this business’s earnings rose 14% on fewer claims. The investor and treasury services business’s earnings (5%) gained 24.2%, thanks to higher deposit volumes and better efficiency.

Royal Bank is a buy.

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