Royal Bank of Canada (TSE:RY) Is Paying Out A Larger Dividend Than Last Year

Simply Wall St
·3 min read

Royal Bank of Canada (TSE:RY) will increase its dividend from last year's comparable payment on the 24th of February to CA$1.32. This takes the annual payment to 3.9% of the current stock price, which is about average for the industry.

See our latest analysis for Royal Bank of Canada

Royal Bank of Canada's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Royal Bank of Canada has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 45%, which means that Royal Bank of Canada would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 8.5% over the next 3 years. Analysts estimate the future payout ratio will be 47% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Royal Bank of Canada Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was CA$2.28, compared to the most recent full-year payment of CA$5.28. This means that it has been growing its distributions at 8.8% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Royal Bank of Canada's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Royal Bank of Canada has seen EPS rising for the last five years, at 8.2% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Royal Bank of Canada's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 Royal Bank of Canada analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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