Canada’s banking sector is recognized broadly as the bedrock of stability. In particular, the more than 100-year dividend track record of the Big Five banks confirms their financial stability.
The largest of them all, the Royal Bank of Canada (TSX:RY), is also TSX’s top large-cap stock by market capitalization. This $282.4 billion lender was established in 1864 and started paying dividends six years later.
Given its dividend consistency and longevity, risk-averse investors can trust this Canadian dividend stock for the next 20 years, if not for much longer. The current share price is $201.02, while the dividend yield is 3.1%.
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Great dividend-payer
Dividend safety is the hallmark of a great dividend-payer. Weaker banks would have collapsed during the World Wars and financial crises. RBC’s assets in World War II even grew significantly after shifting its asset allocation from loans to federal government securities. Despite the move, the bank maintained its lending capability.
Canada’s strict banking regulations helped RBC and its industry peers emerge unscathed after the 2008 financial crisis. The global pandemic in 2020 affected many financial institutions but had minimal impact on Canadian Big Banks, including RBC.
When the financial regulator lifted the restrictions on dividend increases in late 2021, RBC announced an 11% hike in payouts. Its President and CEO, Dave McKay, said a strong balance sheet, diversified business model, and prudent risk management defined RBC’s success during the COVID-19 environment.
Tariff war
Credit stress is a major issue in 2025 after the U.S. initiated a tariff war with Canada and other trading partners. It was another test of the resilience and capital strength across the banking sector. RBC raised its provision for credit losses by 54% to $1.4 billion in Q2 fiscal 2025 versus Q2 fiscal 2024. Still, net income rose 11% year-over-year to $4.4 billion.
Fast-forward to Q3 fiscal 2025, and RBC beat earnings expectations and delivered impressive results. In the three months ending July 31, 2025, net income increased 21% year-over-year to $5.4 billion, a new record. All business segments reported strong growth.
According to McKay, the 13.2% Common Equity Tier 1 (CET1) indicates a robust capital position that should support solid volume growth. He added that the acquisition of HSBC Canada in September 2024 is a catalyst for accelerated growth.
Fitch Ratings has a stable outlook (AA-) for RY. The international credit ratings agency believes the giant lender enjoys superior economies of scale and has an entrenched customer deposit base. It has a diversified business model, with strong wealth management and capital markets footprints in the U.S. and Europe.
No other anchor
The Royal Bank of Canada deserves to be an anchor stock for the vast majority of long-term investors. You have a well-managed financial institution with a lengthy dividend track record. Furthermore, Canada’s largest bank has a celebrated history. It has achieved a “too big to fail” status and held the “throne” on the TSX for years.
