Most Americans, bless their hearts, don’t bother looking north for investments. Home country bias, they call it. Perfectly understandable. Folks like what they know. It’s like preferring your own particular brand of sadness. But sometimes, the money is where you don’t look. Last year, Canada’s stock market did rather well, outperforming ours by a considerable margin. Prime Minister Mark Carney had a plan, you see. Plans happen. So it goes.
Royal Bank of Canada, or RY as the ticker tape whispers, is a big bank. Two hundred and forty-six billion dollars big. It’s gained 46% in the last twelve months. That’s… something. They spread their bets around – wealth management, personal banking, capital markets, the usual. Diversification. A sensible idea, really. Especially for us Americans, who sometimes act as if the world ends at the border. They also happen to be based in Toronto. It’s a city. Like any other.
1. A Margin of… Well, a Lot
Operating margin. That’s what accountants like to talk about. It’s the percentage of revenue a company keeps after paying the bills. Salaries, utilities, the endless drone of overhead. The average S&P 500 company manages about 13.2%. Not bad. Royal Bank of Canada? They’re at 44.8%. More than triple. It’s almost unsettling. There are exceptions, of course. Nvidia is doing quite well for itself, with a margin of 63.2%. But everyone’s noticed Nvidia. It’s the shiny object. Royal Bank of Canada is… quieter. Four hundred and thirty-seven institutional firms increased their stake. A decent number. But 2,744 for Nvidia? The market loves a spectacle. So it goes.
2. Growth and Yield: A Little More Than Average
Last quarter, Royal Bank of Canada reported earnings growth of 29%. More than double the S&P 500 average of 13%. Numbers. They go up, they go down. The bank also raised its dividend by 6.5%, to 1.64 Canadian dollars. That’s roughly a dollar thirty in American money. Some folks get nervous about foreign currencies. They imagine complicated exchanges and fluctuating rates. But analysts predict the Canadian dollar will strengthen. It’s a forecast, naturally. Worth what you pay for it. The dividend yield is about 2.8%, more than double the S&P 500 average. And they’ve increased that dividend by 32% since 2021, while we’ve been dealing with 19% inflation. A small victory, perhaps. So it goes.
3. Priced Like a Secret
Four years into this market rally, the S&P 500 carries a price-to-earnings ratio of 29.9. That’s 50% higher than its historical average. We like things expensive, apparently. Royal Bank of Canada? A P/E ratio of 17. A bargain, almost. Despite gaining 46% in share price, it’s still priced at a discount, both relative to the S&P 500 and to the index’s historical average. It’s flown under the radar, keeping its valuation low. But not for long, probably. Six analysts have raised their earnings forecasts in recent weeks, while only one lowered theirs. A hopeful sign. Or just another number. So it goes.
For investors seeking value, a decent yield, diversification, and a relatively secure stock, Royal Bank of Canada is… well, it’s an option. The world is full of options, most of them leading to the same inevitable conclusion. But sometimes, a quiet profit is enough. It’s a small comfort in a chaotic universe.
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2026-02-11 14:52