ROYAL BANK OF CANADA $63 - Toronto symbol RY

ROYAL BANK OF CANADA $63 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.5 billion; Market cap: $94.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) earned $2.1 billion, or $1.36 a share, in the three months ended January 31, 2013. That’s up 11.6% from $1.9 billion, or $1.22 a share, a year earlier. Revenue rose 4.4%, to $7.9 billion from $7.6 billion. Royal set aside $349 million to cover potential loan defaults, up 30.7% from $267 million. That’s mainly due to extra provisions on specific loans at its securities-trading division.

Low interest rates continue to spur loan demand at Royal’s retail banking operations in Canada, the U.S. and the Caribbean. Strong results from the bank’s trading and wealth management divisions also contributed to the higher results.

Royal also raised its quarterly dividend by 5.0%, to $0.63 a share from $0.60. The new annual rate of $2.52 yields 4.0%.

Royal Bank is a buy.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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