Royal Bank 2

I own this stock (TSX-RY, NYSE-RY). I bought this bank in October 1995. To date, I have made a return of 17.9% per year. Of this total return 5.56% per year is attributed to dividends. So some 31% of my return is accounted for by dividends. On my original investment, I am making a return of 29.75%.

I think that it is important to know how much return is from dividend income. This is an important part of my total return. Without the dividends, my returns would be substantially lower. For this stock 31% of my return is in Dividend income. For Bank of Montreal, it was 44%.

The insider selling at Royal Bank is not quite as bad as at BMO, but almost. Here there is some insider selling of $19.8M and net insider selling at $19.2M. There is modest insider buying by directors. The CEO has insider selling of $13.4M. There is also insider selling by the CFO, officers and directors. It would seem that they are not keeping stock options. CEO, CFO and officers all have lots more stock options than shares.

There are some 524 institutions that hold 54% of the shares of this bank. There has been buying and selling by these institutions over the past 3 months with them marginally (i.e. less than 1%) increasing their holdings.

The 5 year median low Price/Earnings Ratios is 11.68 and the 5 year median high ratio is 18.04. The current one of 10.5 would therefore show a rather low relative stock price. It is also a rather low absolute stock price. I get a Graham price of $51.58. This is 5.7% higher than the current stock price of $48.62. The 10 year low difference between the Graham Price and the stock price is the stock price being some 4% higher. By this measure, the stock price is also relatively low.

I get a 10 year median Price/Book Value Ratio of 2.34 and a current P/B Ratio of 1.90 which is 81% of the median P/B ratio. By this measure the stock price is also relatively low. I get a 5 year median dividend yield of 3.92% and a current yield of 4.44%. This shows a relatively low current stock price. So does the 10 year median high dividend yield, which is just 3.65%.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. By and large, the biggest number of recommendations is Hold. The consensus recommendation would be a Hold. Analysts with Buy recommendations talk about its cheap price. Those with Hold recommendations talk that this and other Canadian Banks, are relatively high compared to worldwide banks. They think that Canadian banks stock prices will not improve in the near future.

I, of course, will hold on to the shares I own. I own too much in Canadian banks to buy anymore at this time.

The blogger addicted2dividend has blogged about this stock recently at The Loonie Bin.

Royal Bank of Canada 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 Royal Bank. 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.