Dividend Raise: Royal Bank of Canada (RY)

Royal Bank of Canada Dividend Increase

On February 24th, Royal Bank of Canada (RY) raised their quarterly dividend 2.53% from $0.79 to $0.81. RY’s Q2 2015 dividend payment was $0.77, so this represents a one year increase of 5.19%.

Considering the Dividend Beginner Portfolio consists of 25 shares of RY, my annual income from RY has increased by $2.00, from $79.00 to $81.00 ($6.58 to $6.75 per month). My 12-month forward dividend income has risen from $1,374.70 to $1,376.70, an increase of 0.15%.

My average monthly dividend income is now $114.73. I’m becoming more confident with each passing month that I’ll have an average monthly dividend income of $150.00 before the end of 2016. My 12-month forward dividend income must be increased by $423.24 to meet this average. This would require an investment of $10, 581 at 4.00%, which is a high yield.

While a $2.00 increase in annual dividend income is laughable, think about how it would require an investment of $50.00, yielding 4.00% to generate $2.00 in dividend income.

RBC Logo

Before RY div. raise Net Increase After RY div. raise
Annual Dividend Income $1, 374.70 $2.00 $1,376.70
Monthly Dividend Income $114.56 $0.17 $114.73
Percentage Increase 0.15%

In this Globe & Mail article, “RBC braces for losses tied to oil sector woes“, I’ve taken these points into consideration & to share with you readers on RY’s Q4 results:

  • the bank offered assurances that its exposure to the energy sector was manageable, noting that loans to the oil and gas sector accounted for just 1.6 per cent of its total loans.
  • It said that its profit during the first quarter was $2.4-billion, unchanged from last year but down 6 per cent from the fourth quarter. On a per-share basis, earnings fell to $1.58 from $1.65 last year.
  • Profit from RBC’s personal and commercial banking division rose to nearly $1.3-billion, up 3 per cent over last year, reflecting the challenging environment of slowing loan growth, low interest rates and a weak domestic economy.
  • Net income from capital markets fell 4 per cent, to $570-million, reflecting a slowdown in investment banking.
  • City National Bank, the Los Angeles-based private and commercial bank acquired by RBC at the start of the fiscal first quarter, contributed $53-million to the RBC’s earnings.

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