The first two banks to report quarterly earnings stunned analysts with their returns and investors rewarded both bank stocks by sending them higher. Analysts continue to remain skeptical about the growth potential of Canada’s big banks. As a result they underestimate earnings and revenue growth potential. Royal Bank of Canada (TSX: RY) reported an impressive 15 percent jump in net income to$2.20 billion which included record wealth management earnings as more baby boomers continue to retire. Royal Bank earned $1.25 per share up 22 cents from the same quarter last year.
The wealth management division recorded net income of $278 million up 25% from the same quarter last year. The only downside in the Royal Bank earnings was a $10 million drop in insurance representing a drop of 6%.
Royal Bank Stock 15.4% return
Since April 30 last year Royal Bank Stock (RY) is up 15.4% without taking dividends into account. The dividend on its own added another 4% to the return for the year.
Lion Meet Momma
I have had a love affair with the Canadian banks since the 1970’s. Even when they lost millions to Brazil in the mid 1980’s I kept trading our banks. The level of comfort is incredibly high and the banks are well-managed, conservative and know how to reward stock holders. There is so much to like about Royal Bank of Canada. The Lion symbol is truly warranted for Royal Bank. But while the stock has more than doubled since the collapse of all the banks at the height of the credit crisis, I instead have used the Walk That Profit Home To Momma Strategy since the fall of 2008 on Royal Bank Stock and TD Bank Stock. The results have been stellar with no year returning less than 20% and in the recovery years many years returned better than 35% annually.
This is a strategy discussion article for FullyInformed Canada Members looking at the Walk That Profit Home To Momma Strategy on Royal Bank Stock (RY).
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