If you’re a cautious, long-term investor, chances are Royal Bank of Canada (TSX: RY) has crossed your radar more than once. It’s a core holding in a lot of portfolios as it tends to shine brightest when markets get shaky. The largest Canadian bank is suddenly back in the spotlight with its fiscal second quarter of 2025 (for the three months ended in April) earnings scheduled for May 29.
With signs of easing trade tensions, central banks holding rates steady, and the TSX on a multi-week rally, RY stock has jumped by nearly 14.5% in the last 25 sessions and currently trades at $175.84 per share with a market cap of $248.7 billion. Investors buying at today’s price can expect a 3.4% annual dividend, paid quarterly.
In this article, let’s look at whether now is the right time to buy Royal Bank stock or if you should wait for the earnings picture to clear.
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What’s driving the recent rally in Royal Bank stock?
On the broader front, the TSX rally has mainly been fuelled by easing inflation pressures and expectations that the central banks could slash interest rates in the near term. When central banks cut rates, financial giants like Royal Bank often enjoy a boost. Add to that improving investor sentiment in Canada’s banking sector, and it’s not surprising RY stock has come back into favour.
But there’s more to the story than just market mood. Royal Bank’s strong bounce also reflects investor confidence in its resilience and scale — especially after completing the acquisition of HSBC Canada. That deal instantly deepened its foothold in both domestic and global markets and brought fresh momentum to several of its core business segments.
The financial momentum is hard to miss
With the next earnings date just around the corner, it might help to look at the kind of growth the bank has already delivered. Royal Bank kicked off fiscal 2025 with record-breaking numbers. In the fiscal first quarter, its adjusted net income jumped by 29% YoY (year over year) to a record $5.3 billion. Even more impressive, the bank’s earnings rose 27% YoY to $3.62 per share. This impressive growth came across all major segments, from personal and commercial banking to wealth management and capital markets.
A closer look at what could drive Royal Bank stock’s next leg up
As investors look toward Royal Bank’s May 29th earnings release, there are a few key things to keep an eye on. For one, the bank’s ability to sustain momentum across its business segments, especially after integrating HSBC Canada, could set the tone for another leg up in Royal Bank stock.
In addition, I would be watching closely for volume growth in its loans and deposits, continued strength in its fee-based revenues, and how it’s managing expenses as it invests in technology.
With its scale, strong financials, and consistent financial growth, Royal Bank checks a lot of boxes for long-term investors. And with a 3.4% dividend yield to sweeten the deal, RY stock could very well be a smart buy, especially before the market gets a fresh look at its earnings on May 29.
