Insights into Royal Bank of Canada's Upcoming Dividend and Its Historical Performance
Royal Bank of Canada (RY, Financial) recently announced a dividend of $1.38 per share, payable on 2024-02-23, with the ex-dividend date set for 2024-01-24. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Royal Bank of Canada's dividend performance and assess its sustainability.
What Does Royal Bank of Canada Do?
Royal Bank of Canada is one of the two largest banks in Canada. It is a diversified financial services company, offering personal and commercial banking, wealth-management services, insurance, corporate banking, and capital markets services. The bank is concentrated in Canada, with additional operations in the U.S. and other countries.
A Glimpse at Royal Bank of Canada's Dividend History
Royal Bank of Canada has maintained a consistent dividend payment record since 1989. Dividends are currently distributed on a quarterly basis. Moreover, Royal Bank of Canada has increased its dividend each year since 2010. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Royal Bank of Canada's Dividend Yield and Growth
As of today, Royal Bank of Canada currently has a 12-month trailing dividend yield of 3.99% and a 12-month forward dividend yield of 4.11%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Royal Bank of Canada's annual dividend growth rate was 7.60%. Extended to a five-year horizon, this rate decreased to 6.90% per year. And over the past decade, Royal Bank of Canada's annual dividends per share growth rate stands at 7.30%.
Based on Royal Bank of Canada's dividend yield and five-year growth rate, the 5-year yield on cost of Royal Bank of Canada stock as of today is approximately 5.57%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, Royal Bank of Canada's dividend payout ratio is 0.51.
Royal Bank of Canada's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Royal Bank of Canada's profitability 6 out of 10 as of 2023-10-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Royal Bank of Canada's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Royal Bank of Canada's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Royal Bank of Canada's revenue has increased by approximately 7.00% per year on average, a rate that outperforms approximately 53.71% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Royal Bank of Canada's earnings increased by approximately 13.20% per year on average, a rate that outperforms approximately 63.29% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.80%, which outperforms approximately 49.4% of global competitors.
Next Steps
Considering Royal Bank of Canada's consistent dividend payments, robust dividend growth rate, prudent payout ratio, solid profitability, and favorable growth metrics, the bank's dividend appears to be on a sustainable path. Investors seeking to capitalize on dividend income may find Royal Bank of Canada an attractive option, underpinned by its financial health and commitment to shareholder returns. As the financial landscape evolves, Royal Bank of Canada's strategic position within the industry and its adaptability to market changes will be key factors in maintaining its dividend prowess. For those looking to expand their portfolio with dividend-yielding stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for more investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
