When markets get jittery, even the biggest names can take a hit. But that’s not exactly what we’ve seen with Royal Bank of Canada (TSX: RY), the largest company on the TSX and the country’s most valuable bank. It’s long been considered a safe haven for Canadian investors, but with rising loan losses, concerns over consumer debt, and a mixed housing market, many are wondering: Is RY stock still a buy in July 2025, or is it time to head for the exits?
Let’s break it down.
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Recent earnings
Royal Bank reported its fiscal second-quarter (Q2) 2025 results in May, and they were decent. Net income rose 11% to $4.4 billion year over year. Earnings per share hit $3.02, a 10% climb from 2024 levels. Yet in this market, anything short of perfection can trigger a pullback. With earnings now around the corner, shares of RY are near all-time highs, so it has a few investors jittery.
Still, RY is hardly in trouble. Its wealth management arm saw net income rise by 11%, thanks to strong client inflows and rising assets under management. Insurance and capital markets posted weaker results, but nothing that looks alarming. Most importantly, the bank increased its quarterly dividend by 4% to $1.54 per share, which yields 3.4% annually.
Zooming out
Of course, the biggest concern continues to be credit losses. RY set aside $1.4 billion in provisions for credit losses, down 30 basis points from the year before. That’s a green flag for some investors, as it suggests lower stress in consumer and business loans. Plus, Royal Bank has one of the strongest balance sheets in the sector, with a common equity tier-one ratio of 13.2%. That’s well above regulatory minimums and gives the bank a cushion if things worsen.
Meanwhile, the integration of HSBC Canada, which RBC acquired for $13.5 billion, remains underway. The deal should give Royal a stronger foothold with internationally minded clients and boost its retail and wealth management base. It won’t move the needle overnight, but it’s a smart long-term play for growth.
Considerations
Selling right now doesn’t make much sense unless you believe Canada is headed for a severe recession and the banking sector is due for a major reset. Even then, RY would likely fare better than most due to its diversified operations and conservative lending practices. The current price isn’t screamingly cheap, but it’s not overpriced either. You’re paying about 14.5 times forward earnings for a company that has increased its dividend for 14 consecutive years and has weathered every economic storm thrown its way.
As for buying, that depends on your time frame. If you’re looking for a quick pop, you might be disappointed. With interest rates still elevated and Canadian consumers feeling the pinch, it’s unlikely Royal Bank will deliver explosive growth in the next quarter or two. But if you’re playing the long game and you want dependable dividends, slow and steady capital gains, and exposure to Canada’s financial backbone, RY is still a buy at these levels.
Bottom line
For most investors, the best course of action in July 2025 is to hold. Royal Bank remains a core position in many Canadian portfolios for good reason. It’s big, stable, and relatively boring, which is exactly what most people want from a bank stock. But if it dips below $175, long-term investors might want to consider topping up.
It’s easy to get caught up in market noise, especially during earnings season or when economic headlines turn grim. But Royal Bank of Canada has proven again and again that it knows how to navigate uncertainty. Whether you’re adding, sitting tight, or just watching, this is one stock that still deserves a spot on your radar.
