royal bank
PLEASE NOTE: Our next Hotline will go out on Thursday, June 30, 2011. ROYAL BANK OF CANADA, $53.92, Toronto symbol RY, is selling its struggling U.S. retail-banking operations, which consist of 424 branches in six southeast states. The buyer, PNC Financial Services Group Inc. (New York symbol PNC), is also purchasing Royal’s U.S. credit-card operations. Royal will hang onto its U.S. wealth-management and brokerage businesses. PNC is paying $3.6 billion U.S. for these assets, with an option to pay up to $1 billion U.S. of the purchase price in PNC shares. That would give Royal a 3% stake in PNC....
ROYAL BANK OF CANADA $54 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $75.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) earned $1.5 billion, or $1.00 a share, in its 2011 second quarter, which ended April 30, 2011. That’s up 13.3% from $1.3 billion, or $0.88 a share, a year earlier. Revenue rose 2.4%, to $7.1 billion from $7.0 billion. The quality of the bank’s loan portfolio continues to improve. It cut its loan-loss provisions by 31.7% in the latest quarter, to $344 million from $504 million. Royal also saw strong earnings gains at its wealth management (up 144.4%), insurance (up 36.4%) and Canadian banking (up 15.6%) divisions. Royal also raised its quarterly dividend by 8.0%, to $0.54 a share from $0.50. The new annual rate of $2.16 yields 4.0%....
We’ve long recommended that all Canadian investors own shares of two or more of the big-five Canadian banks. That’s mainly because of the banks’ importance to Canada’s economy. However, each of the big five banks have different objectives, so they’re not all suitable for every investor.
Dividend paying stocks: Scotia is Canada’s most international bank
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BANK OF NOVA SCOTIA $58.14, Toronto symbol BNS, has joined a new consortium called Maple Group Acquisition Corp. Other members include CIBC, TD Bank, National Bank and five major pension funds. Maple wants to buy a controlling interest in TMX GROUP $45, Toronto symbol X, which operates the Toronto Stock Exchange. TMX has already accepted a takeover offer from the London Stock Exchange. (Note that Royal Bank and Bank of Montreal are advising on that potential merger. That’s why they are not part of Maple.)...
Three of Canada’s big-five banks, BANK OF NOVA SCOTIA, $58.49, Toronto symbol BNS, CANADIAN IMPERIAL BANK OF COMMERCE, $84.40, Toronto symbol CM, and TORONTO-DOMINION BANK, $84.15, Toronto symbol TD, have joined a new consortium called Maple Group Acquisition Corp. Other members of this group include National Bank and five major pension funds. Maple wants to buy a controlling interest in TMX Group Inc. (Toronto symbol X), which operates the Toronto Stock Exchange, the TSX Venture Exchange and the Montreal Exchange. In February 2011, TMX accepted a takeover offer from the London Stock Exchange Group. Under the terms of that offer, TMX shareholders would own 45% of the combined company, which would be the world’s second-largest stock exchange by market cap....
iShares S&P/TSX Capped Financials Index Fund, $24.56, symbol XFN on Toronto (Shares outstanding: 42.4 million; Market cap: $1.0 billion; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Financials Index, which is made up of the largest-capitalization financial-sector stocks on the Toronto exchange. The fund currently holds 26 stocks. The weight of any one company is capped at 25% of the index’s market capitalization, regardless of how big the stock is in relation to the index. The fund’s MER is 0.55%. It yields 5.0%. The fund’s top holdings are Royal Bank of Canada at 20.5%; TD Bank, 17.3%; Bank of Nova Scotia, 14.9%; Bank of Montreal, 8.5%; CIBC, 7.7%; Manulife Financial, 7.3%; Sun Life Financial, 4.13%; National Bank, 3.1%; Power Corporation, 2.3% and Fairfax Financial Holdings, 1.8%....
Brompton Equity Split Corp., $12.97, symbol BE on Toronto (Shares outstanding: 1.7 million; Market cap: $21.9 million; www.bromptongroup.com) mainly invests in large-cap Canadian stocks. The fund was scheduled to wind up on May 31, 2011. However, it now plans to merge with Dividend Growth Split Corp., $9.21, symbol DGS on Toronto (Shares outstanding: 4.3 million; Market cap: $40.0 million; www.bromptongroup.com), on May 18, 2011. The new Dividend Growth Split Corp., symbol DGS on Toronto, will have a termination date of November 30, 2019....
We’ve long recommended that all Canadian investors own two or more of the big five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy. Like most stocks, the top five banks slumped deeply during the 2007-2009 market downturn and financial crisis. But since the market turnaround of March 2009, several of the top five have recovered and gone on (at least briefly) to all-time highs. Few other stock groups have done as well. (In a recent Successful Investor Hotline, we updated our buy/sell/hold advice on Toronto-Dominion Bank, which is the second biggest of the big-five Canadian bank stocks, after Royal Bank. Read on for further details.)...
Dividend 15 Split Corp., $12.30, symbol DFN on Toronto (Shares outstanding: 13.6 million; Market cap: $167.3 million; www.dividend15.com), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, Bank of Nova Scotia, Thomson Reuters, National Bank of Canada, TransAlta Corporation, Sun Life Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, Royal Bank of Canada, Bank of Montreal, Telus Corporation and Enbridge. The company can also invest up to 15% of its portfolio in other stocks. Dividend 15 Split Corp. has two share classes: Dividend 15 Split Corp. capital shares (Toronto symbol DFN), and Dividend 15 Split Corp. preferred shares (Toronto symbol DFN.PR.A)....
ISHARES S&P/TSX 60 INDEX FUND $20.44 (Toronto symbol XIU; buy or sell through a broker; ca.ishares.com) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets. Most of the stocks in the index are high-quality companies. However, as it must ensure that all sectors are represented, it holds a few we wouldn’t include, such as Yellow Media Inc. The index’s top holdings are: Royal Bank, 6.7%; Suncor Energy, 5.9%; TD Bank, 5.8%; Bank of Nova Scotia, 5.3%; Canadian Natural Resources, 4.4%; Barrick Gold, 4.3%; Potash Corp., 4.2%; Goldcorp, 3.1%; Bank of Montreal, 2.9%; CN Railway, 2.7%; Manulife Financial, 2.7%; CIBC, 2.7%; Research in Motion, 2.5%; and Cenovus Energy, 2.3%....