Yahoo Finance Royal Bank of Canada (TSE:RY) Will Pay A Larger Dividend Than Last Year At CA$1.42
Royal Bank of Canada (TSE:RY) will increase its dividend from last year's comparable payment on the 23rd of August to CA$1.42. Although the dividend is now higher, the yield is only 3.8%, which is below the industry average.
See our latest analysis for Royal Bank of Canada
Royal Bank of Canada's Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Royal Bank of Canada has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Royal Bank of Canada's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS is forecast to rise by 8.5% over the next 3 years. Analysts forecast the future payout ratio could be 48% over the same time horizon, which is a number we think the company can maintain.
Royal Bank of Canada Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was CA$2.68 in 2014, and the most recent fiscal year payment was CA$5.68. This means that it has been growing its distributions at 7.8% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
Royal Bank of Canada May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 4.6% a year for the past five years, which isn't massive but still better than seeing them shrink. The company has been growing at a pretty soft 4.6% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.
Royal Bank of Canada Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for Royal Bank of Canada for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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