It is now the time for earnings to be released by Canada’s largest banks, with the "Big 6" set to report out within the next few weeks. First on the list to report is Royal Bank of Canada (TSX:RY)(NYSE:RY), Canada’s largest bank and one investors have looked at as a sort of bellwether to see how the other banks might perform in general in the upcoming trading days.
On Wednesday, RBC reported its third quarter earnings, showing both top and bottom line growth, reporting a slight adjusted revenue increase of 0.2%, adjusted net income increase of 5.1%, and adjusted earnings per share (EPS) increase of 7.6%, each of which was in line with analyst expectations.
What sent the Canadian lender’s stock price higher on Wednesday, however, was the decision by RBC’s management team to hike the dividend again by 4.6%. This dividend increase results in RBC shareholders receiving a new yield of closer to 4% (approximately 3.91%), making the stock more attractive for income-focused investors considering adding a safe options in the financials space.
It appears that RBC may still remain undervalued following the company’s earnings report when looking at a few key fundamental drivers for the business. With an earnings growth rate just below 7%, and an increasingly income investor friendly approach to dividend distributions, RBC is one of the best options available among the Big 6 banks, one which I like much better than its peers (except for maybe TD) at this point in time.
Invest wisely, my friends.
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