Dividend Stock Analysis: Royal Bank Of Canada (TSE: RY)

Submitted by Bullish Dividends on Sun, 02/01/2009 - 14:43.

Its been a while since my last dividend stock analysis, so I thought I'd start with what should be a heavy hitter, Royal Bank Of Canada (TSE: RY). I have replaced the Dividend Achievers slot, with the DividendInvenstors.ca star rating, due to the dividend achievers list no longer being viewable online. (If you know of a new address for it, please let us know in the comment section! As we all know, all the banks have been hit hard in recent months. Lets see how their overall scores turn out now that things have calmed down a bit.

About the company:

Here is Royal Bank of Canada's description of what they do, which can be found on their website here

"RBC provides personal and commercial banking, wealth management services, insurance, corporate, investment banking and transaction processing services on a global basis. RBC employs more than 80,000 full and part-time employees who serve more than 17 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 48 other countries"

What the professionals think:

Source	Value	Score
Is it a Dividend Aristocrat:	Yes	0.5
DividendInvestors.ca rating:	5 Stars	0.5
Globe Investor Rating:	3 Stars	0

Score: 1.0/1.5

Dividend performance:

Dividend Information acquired at DividendInvenstors.ca

Measurement	Value	Measurement	Value
Dividend Rate:	$2.00	Quarterly Dividend Rate:	$0.50
Current Dividend Yield:	6.60%	5 yr. Avg. Dividend Yield:	3.00%
3 yr. Dividend Growth:	22.65%	5 yr. Dividend Growth:	23.48%
Payout Ratio:	59%	5 yr. Historic Payout Ratio:	44%

Measurement	Value	Score
Is current Yield > Avg Yield:	Yes	1
> 10% dividend growth per year:	Yes	1
> 5 yrs of dividend growth:	Yes	1
payout ratio <= historic payout ratio:	No	0

Score: 3.0/4.0

Fundamentals:

All fundamentals based on 2008 annual report, and the latest market close share price of $30.41

Measurement	Value	Score
Earnings per share (EPS):	3.4	-
Is EPS growing:	No	0
Net Profit Margin:	21.11%	-
Is Net Profit Margin growing:	No	0
Price/Book Ratio (P/B) < 0.80:	1.32	0
Price/Earnings Ratio (P/E) &lt 15:	8.94	0.5
Price/Sales Ratio (P/S) &lt 1.5:	1.89	0
Is the Graham Number > stock price:	$41.90	1

Score: 1.5/3.5

Technicals:

Chart Acquired at StockCharts.com

Measurement	Value	Score
200 day Simple Moving Average direction:	Down	0
Indicators show a good time to buy (MACD, SSTOCH, RSI):	No	0

Score: 0/1.0

Total Score: 5.5/10

Summary:

Well, RY only got a 5.5 out of 10. Which I kind of suspected it would get, along with all the other banks, they really did get hit hard in the recent market troubles. Based soley on the score, I have to give it a failing grade, so a Don't Buy. But, I am personally thinking what I think most dividend based investors are, I don't think the problems are behind us yet, but it may still be a good time to start buying up the banks again. It may be a few years before they recover, but if you have a long time ahead of you before retirement, the banks are almost always a pretty good bet, and Royal is a very good bank. I "think" that you can expect a long history of continued dividend payments from this bank, so its not a bad pick at all. The Graham Number is showing very favorably, at more then a $10 difference between it and the current price, this means as a value pick, RY is a very good candidate. Let us know your thoughts on Royal Bank of Canada (TSE: RY) in the comments below.

Recommendation: Based on score Don't Buy, if you want long term dividend purchase, this may still be a good time to buy

Full Disclosure: I currently do NOT own shares in Royal Bank Of Canada TSE: RY

Disclaimer: Any information contained in the above article represents my opinions only, and should not be construed as personalized investment advice. I cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of the article bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice.

Bookmark/Search this post with: