Income · Stocks to Consider and Updates

Royal Bank of Canada Beats, Raises Dividend

RY  Royal Bank of Canada (NYSE: RY – $73.82) posted a better-than-expected 4% increase in its fiscal third-quarter profit and increased its dividend, as profits in its domestic banking, capital markets, wealth management and insurance divisions hit record levels. RBC, Canada’s largest bank, earned C$2.38 billion (US$2.17 billion), or C$1.59 a share, up from C$2.29 billion, or C$1.51 a year earlier. Royal Bank also raised its quarterly dividend 6%, and will now pay C$0.75 quarterly, yielding investors about 3.5%. Results in the bank’s latest quarter include a loss of C$40 million related to the sale of its Jamaican operations. Adjusted earnings, which added back some noncash items, were C$1.64 a share. That was well ahead of the C$1.56 a share analysts had expected. The bank went on to say its Canadian banking operations generated a record C$1.19 billion in earnings, up 3% from a year earlier, driven by an increase in volumes and growth in mutual fund sales. Wealth management earnings climbed 22% to C$285 million, while insurance earnings reached C$214 million, up 34%. In capital markets, RBC said earnings jumped 66% to a record C$641 million from a year earlier, fueled by strong equity and debt markets and strong growth in lending. While I do not expect the shares to be barn burners over the course of the next year, a holding in a well-diversified income portfolio should provide investors with reasonable total returns, especially when viewed on a risk adjusted basis.


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