Monday, January 14, 2013

Royal Bank of Canada

On my other blog I am today writing about Bear Markets. Is one coming in 2013...continue...

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). I have had this stock since 1995, which is some 18 years. I have made a total return 18.35% per year, with 13.06% per year coming from capital gains and 5.29% per year coming from dividends. This is what long term investing can get you.

The last 5 and 10 years to December 2012 have not been as good as total return was 7.19% and 11.71% per year respectively. Over these periods the capital gain return was 3.37% per year and 7.76% per year respectively. Also, over these periods the dividend return was 3.82% per year and 3.95% per year, respectively.

This bank along with other Canadian banks stopped dividend increases in 2008. The 10 year growth in dividend is at 11.61% per year and this is not far from what I have experienced over the past 18 years at 12.24% per year. However, the 5 year increase in dividends has only been at 5.8% per year, a much lower figure. This is not the first time this bank has stopped dividend increases. It did this from 1990 to 1994.

Current Dividend Payout Ratios are good. The DPR for earnings was 46% in 2012 and is expected to be around 45% in 2013. The DPR for Cash Flow was around 32.7% in 2012 and is expected to be around 37.5% in 2013.

The number of shares outstanding has been increasing over the past 5 and 10 years at the rate of 2.52% per year and 0.83% per year respectively. Increases have been for acquisitions, because of DRIP, Employee ownership plans and stock options and they have been reduced because of share buy backs.

Revenue is up 5.8% and 5.6% per year over the past 5 and 10 years. Revenue per Share is up by 3.2% and 4.7% per year over the past 5 and 10 years. EPS are up by 3.3% and 9.6% per year over the past 5 and 10 years. CFPS is up by 6.5% and 7.9% per year over the past 5 and 10 years. Book Value per Share is up by 9.2% and 7.7% per year.

The growth is generally better over the past 10 years than over the past 5. Growth is generally ok, but there is nothing spectacular in any of it.

The Return on Equity is generally quite good. The ROE for the financial year ending in October 2012 was 19.1% and the 5 year median ROE is 15.3%. The ROE based on comprehensive income is close to that on the net income with ROE for October 2012 at 20% and the 5 year median ROE at 14.4%. (A good ROE is one consistently over 10% and this stock manages that.)

The debt ratios are rather normal for a bank with the Debt Ratio at 1.06 and Leverage and Debt/Equity Ratios at 20.91 and 19.75, respectively.

This bank is doing better than it has since 2008 bear market. The dividend increases for 2012 was at 11.1% which is good. I think that there is room for dividend increases this year also, because the DPRs are good. I am invested in this bank for the long term and I intend to hold on to the shares I have. I will not be buying more for the simple reason that I have enough of this stock already in my portfolio.

Royal Bank of Canada (RY on TSX and NYSE) 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 RBC. See my spreadsheet at ry.htm.

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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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