5 Reasons to Buy and Hold This Canadian Stock Forever

Canada’s largest bank is a high conviction forever stock for long-term investors.

Key Points
  • Royal Bank of Canada (TSX:RY) is a $289.2B diversified banking leader and dependable income stock—trading near $201.20 with a ~3.06% yield and a 155‑year dividend track record.
  • Strong Q3 2025 results (net income +20%), solid capitalization despite higher provisions, and top‑tier AI maturity support its role as a resilient buy‑and‑hold anchor in a diversified portfolio.
  • 5 stocks our experts like better than [Royal Bank of Canada] >

The buy-and-hold approach is customary for long-term investors in the stock market. Although diversification is highly recommended to mitigate risk, an investment portfolio needs a core holding. However, this anchor stock must possess certain characteristics that align with the investment strategy.

On the Toronto Stock Exchange, Royal Bank of Canada (TSX: RY) is a high-conviction “forever stock” for five key reasons.

A modern office building detail

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Established lender

The bank was established in 1864 as the Merchants Bank of Halifax. It became a public company in 1869 with an initial capital of $300,000. After being renamed the Royal Bank of Canada in 1901, the bank experienced rapid growth until 1930, aided by a successful acquisition strategy.

In 1929, RBC became the first Canadian bank to exceed $1 billion in assets. Notably, the bank survived the stock market crash in the same year. Significant growth occurred in the 1960s when management focused on consumer lending.

Size and scale

Today, RBC is the largest publicly listed Canadian company by market capitalization. The $289.2 billion financial institution has the size and scale to withstand economic uncertainty. Its diversified business model consists of five segments, all of which enjoy market-leading positions.

The bank logo, featuring the letters RBC and the modernized Leo the lion symbol, reflects the unification of its various business platforms under one brand. It also indicates an expanding international presence. The US is RBC’s second home market, and it operates in 27 other countries.

According to the Office of the Superintendent of Financial Institutions (OSFI), Canadian financial institutions “remain well-positioned to navigate the risk environment and have demonstrated strong financial resilience and downturn preparedness.

Bedrock of stability

Canada’s banking sector is known worldwide as a bedrock of stability. The Big Five bank stocks, in particular, are staples in a Canadian investor’s stock portfolio. Like its peers in the elite circle, RBC has paid dividends for more than a century, a track record spanning 155 years.

As of this writing, RBC’s share price is $201.20 with a year-to-date gain of 19.2%. The dividend yield is 3.1%. Given its lengthy payment history, the quarterly dividends are likely dependable. It’s like receiving a steady, pension-like income.

Financial strength

RBC’s financial health and balance sheet remain strong. In Q3 fiscal 2025 (three months ending July 31, 2025), net income increased 20% to $5.4 billion compared to Q3 fiscal 2024. However, the provision for credit losses (PCL) rose 34% year-over-year to $881 million.

Nonetheless, Graeme Hepworth, Chief Risk Officer of RBC, said, “As always, we continue to proactively manage risk through the cycle, and we remain well capitalized to withstand a broad range of macroeconomics and geopolitical outcomes.” 

Tech-oriented

RBC ranked third for artificial intelligence (AI) maturity based on the 2025 Evident AI Index. It’s also the only Canadian bank in the top 10 out of 50 global financial institutions.

According to President and CEO Dave McKay, the ranking is proof of the bank’s decade-long investment in AI and unwavering commitment to innovation. Some analysts say RBC is thinking like a tech company.

Stand-alone or anchor

As the TSX’s top bank, RBC provides both recurring passive income and potential for capital growth. It works well as a stand-alone investment or as an anchor in a diversified stock portfolio.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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