Matt Kacur Royal Bank RY-T STRONG BUY Aug 06, 2025

Yield of 3.5% is not as high as it once was, given the move in the stock price. About 15-16% ROE, and it retains half of that. If that can continue, should be able to grow the bottom line in mid-high single digits. Valuation is above historic averages. Better opportunities in the sector, such as TD.

Ranks 8/10 on fundamentals and value. Remains an anchor in the Canadian banking system. Diversified business model. Believes it's still on track for record earnings for 2025. Commercial metrics show signs of slipping, but good capital position and clean balance sheet.

Valuation not cheap, don't buy now. Decent yield of ~3.4%.

Not quite as much a premium to the group as it was. Delivering best on some of its earnings. 

Best Canadian bank. Going higher. Dominant personal and commercial franchise in Canada. US business not as good as the Canadian one, but has turned a corner. Biggest wealth management franchise in Canada. Global top 10 in capital markets, which should grow nicely.

Main reason to invest today is its purchase of HSBC Canada a year or so ago. Analysts haven't yet fully priced in the synergies from that acquisition. It now has more of a global platform. More global capabilities means you attract more global investors and more recurring revenues. 

Interprovincial barriers coming down in Canada and a higher infrastructure spend will promote growth in Canada, and the banks will benefit. Yield is 3.50%.

Extremely well-run and conservative. It has outperformed the S&P for decades. Is very bullish RY and Canadian banks. There's ongoing dividend and earnings growth. Is overcapitalized with lots of runway to deliver 8-10% earnings growth over time and therefore 10% annualized return for the next 5 years.

Like GS-N, it's the dominant bank in its country, and trades at a premium to peers, but deserves the premium because they've expanded into the lucrative wealth management area. They don't suffer problems in US retail banking like some peers; RY exited that decades ago. The forward PE of 13-14x is slightly higher than historic and this sector, but is justified through earnings growth.

Banks in general have performed quite well this year in spite of the pressure of 5 year mortgages coming due at higher interest rates. Banks are good for long term holds of 5 to 10 years or longer with increasing dividends and capital appreciation. Royal Bank is the biggest.

The question asked the guest to compare the two with a view to buying one of them. She prefers Royal Bank right now. It just delivered record results and is growing at 10% year over year. TD has gone through a rough patch and is re-structuring which is eating into profits. She doesn't think Royal Bank will split.