Royal Bank (TSX: RY) is the largest financial institution in Canada and the biggest fish on the S&P/TSX Composite Index by market capitalization. Today, I want to discuss why I’m looking beyond Royal Bank and its peers to a different kind of dividend titan in June 2023. That way, investors can at least rely on superior income generation in the weeks and months ahead. Let’s jump in.
Why I’m looking beyond Royal Bank stock for the rest of 2023
Shares of Royal Bank have dropped 4.6% month over month as of close on Friday, June 9. That has pushed its stock into negative territory so far in 2023. Recent developments should spark skepticism among investors when it comes to Royal Bank and its peers. That may be warranted when we consider the warnings of some of the experts in the world of investing.
A recent analyst report from Bank of Montreal predicted that bank stock prices would “remain depressed” in the near term. Analyst Sohrab Movahedi said that a “soft revenue environment” and “two years of flat earnings per share growth between 2022 and 2024” would likely contribute to the lack of price growth for Canada’s top banks. Investors who are looking to the long term might want to take advantage of discounts in this arena as these profit machines cannot be kept down for long. However, investors who want to get paid now might want to target the high-yield dividend titan I want to zero in on today.
Here’s why this dividend titan is one of my top picks right now
TransAlta Renewables (TSX: RNW) is a Calgary-based company that owns, develops, and operates renewable and natural gas power-generation facilities and other infrastructure assets in Canada, the United States, and Australia. Shares of this dividend stock have increased 3.6% month over month at the time of this writing. The stock is up 9.3% in the year-to-date period.
This company released its first-quarter fiscal 2023 earnings on May 5. TransAlta reported revenues of $119 million — down from $143 million in the previous year. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were reported at $128 million compared to $139 million in the first quarter of fiscal 2022. However, it posted net earnings of $45 million, or $0.17 per share, which was up from $41 million, or $0.15 per share, in the previous year.
Earnings took a hit due to decreased renewable power production compared to the prior year. According to the first quarter report, this decline was due to lower wind resources, higher unplanned outages in United States wind and solar as well as lower water resources. TransAlta Renewables did report improved performance at its Windrise wind facility.
Bottom line
Shares of this top dividend stock are trading in favourable value territory compared to its industry peers. Meanwhile, this stock offers a monthly distribution of $0.078 per share. That represents a very tasty 7.5% yield.
