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The Average Canadian Stock Investor Owns This 1 Stock: Do You?

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Written by Amy Legate-Wolfe at The Motley Fool Canada

When it comes to choosing stocks, it can be interesting to find out what other investors are holding. Of course, investing in a stock shouldn’t be considered a popularity contest. But if the average Canadian investor is holding one stock, then it does, of course, warrant perhaps some digging into.

What is this magic stock?

To figure out the stock that the average Canadian investor owns, I simply looked at the company with the highest market capitalization on the TSX today, and saw how much of the public owns it. The largest market cap still belongs to Royal Bank of Canada (TSX:RY) by a long shot at $191.09 billion as of writing.

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From there, we can see that just over 51% of the company is owned by institutions. That means around 49% are held by the public. Perhaps a bit less, as insiders are likely to also hold RBC stock as well as some government ownership. But overall, it does likely hold the largest amount of public ownership of most other Canadian stocks.

Now that we’ve figured out that the public owns so much of this stock, it’s important to figure out one question. Why?

Why RBC stock

There are broad and narrow reasons that the average Canadian investor is likely to own RBC stock. Let’s start first with the broader reasons. Most Canadians are at least familiar with RBC stock, as it’s one of the country’s oldest and most established banks. This is likely the reason many will likely feel comfortable investing in it or digging into it more in the first place.

Once they dig in, it’s likely they’ll start seeing that the company has a long history of dividend payments. For investors wanting income, this is certainly attractive — especially given that RBC stock is a stable and reliable company in terms of these dividend payments as well as share growth.

Finally, RBC stock can easily be seen as a diversified investment with the click of a button. It invests in various segments of the financial industry, including banking, wealth management, insurance, and investment banking. These are all within Canada as well as around the world, providing diversified income.

Recent reasons

Then there’s the recent performance of RBC stock. Among the Big Six banks, RBC stock has been seen as performing the best even during this economic downturn. Earnings performance has been strong, with the company reporting earnings that exceeded analyst expectations for earnings per share (EPS). Net income rose 14% year over year to $3.6 billion, with diluted EPS up 12% to $2.50.

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Furthermore, the company is still eyeing the future. RBC stock is well protected against the downturn with plenty of provisions for credit losses (PCL). However, it also has an acquisition on hand after purchasing HSBC Canada. This will provide it with even more revenue, especially from wealthy newcomers to Canada that tend to use the bank.

All considered, these are excellent reasons to pick up RBC stock — especially with shares performing well. The company has a history of growing back to all-time highs within a year of hitting 52-week lows during downturns. Given that shares are up 6% and almost at those highs once more, it’s certainly a great time to buy for more growth. Plus, there’s a dividend of 4.08% to consider as well. It’s no wonder most Canadians invest in the stock.

The post The Average Canadian Stock Investor Owns This 1 Stock: Do You? appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2024