Royal Bank of Canada hikes their dividend 2.5%

Royal bank of canada

On August 24th, the

Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $2,895 million for the third quarter ended July 31, 2016, up $420 million or 17% from a year ago and up $322 million or 13% from last quarter. In addition, today we announced an increase to our quarterly dividend of $0.02 or 2% to $0.83 per share. (rbc.com)

However the net income above includes a $235 million after-tax gain on the sale of their home and auto insurance business (RBC General Insurance Company).

Royal Bank of Canada net income up 17% from a year ago

If we strip the gain from the sale away from their net income for a more organic perspective, RBC generated net income of $2,660 million, up $185 million or 7% from one year ago. That’s still a great number though, in consideration of all the fear around Canadian banking linked to the oil patch. It seems like the worst is behind us and the banks may be picking up – but we have yet to see oil come up in a significant way and the Canadian housing market is in bubble territory.

Dividend Income increased 0.09%

As stated, RBC has increased their quarterly dividend from $0.81 to $0.83, a 2.5% increase.

Considering the Dividend Beginner portfolio contains 25 shares of RY, my annual income from RY has increased by $2.00. My 12-month forward dividend income has increased from $2,203.34 to $2,205.34, an increase of 0.09%. My income from RY accounts for a very safe 3.76% of my annual dividend income.

While a $2.00 increase in annual dividend income seems quite low, think about how it would require an investment of $50.00, yielding 4.00% to generate $2.00 in dividend income. That’s the equivalent of getting one to five hours of your life back, depending on your wage.

Before Net Increase After
Annual Dividend Income $2,203.34 $2.00 $2,205.34
Monthly Dividend Income $183.61 $0.17 $183.78
Percentage Increase 0.09%

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