Andrew Walker: Royal Bank of Canada
Royal Bank of Canada (TSX:RY)(NYSE:RY) just reminded investors why it commands a premium multiple in the Canadian banking sector.
The company generated fiscal Q2 2019 results that beat analyst expectations at a time when many pundits are sounding an alarm on the outlook for the industry.
Royal Bank reported Q2 net income of $3.23 billion, representing a 6% increase over the same period last year. Diluted earnings per share rose 7% to $2.20 and ROE was a respectable 17.5%.
Fears surrounding a potential meltdown in the Canadian residential housing market might be overblown. Mortgage rates are falling and the Bank of Canada appears content to sit on its hands for a while to see how things play out in the economy before resuming rate hikes.
In the event a new financial crisis hits, or Canada goes into a recession, Royal Bank is more than capable of riding out a downturn. The company is well capitalized with a CET1 ratio of 11.8%.
The board raised the dividend by 4% earlier this year and investors should see another increase before the end of 2019. The current payout provides a yield of 3.9%.
If you are searching for a buy-and-hold pick for your portfolio, Royal Bank deserves to be on your radar.
Fool contributor Andrew Walker has no position in any stock mentioned.
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