Income · Stocks to Consider and Updates

Royal Bank of Canada Reports 1st Quarter Results, Hikes Dividend

RYRoyal Bank of Canada (NYSE: RY – $65.18) reported adjusted net income of C$2.18 billion for the first quarter ended January 31, 2014, up C$137 million or 7% from the prior year and up C$52 million or 2% from the last quarter of fiscal 2013. The figures exclude items related to the sale of the company’s Jamaican banking business in January. For the quarter, adjusted earnings were C$1.47 per share vs. C$1.36 in the same period of 2012 and C$0.04 better than consensus estimates.  Results were driven by continued strength in the retail Canadian Banking business (income up an adjusted 5% from a year ago), and higher earnings in the Capital Markets (9%), Investor & Treasury Services (34%) and Wealth Management (4%) sectors. The small Insurance division, dragged results a bit due to higher disability and weather-related claims costs. RY also announced an increase to the quarterly dividend of C$0.04 or 6%, to C$0.71 per share for an annualized rate of C$2.84. For the full-year ending October, Royal Bank may earn around US$5.40 per share and US$5.95 next fiscal year, and dividend increases should keep pace with earnings growth. The shares currently yield 4.4% at the new payout rate and today’s share price. I would continue to hold Royal Bank of Canada in an income portfolio for reasonably safe total returns out to late decade. Any new acquisitions by RBC may provide some additional lift to the shares as well. 


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