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Royal Bank of Canada (RY)

Company Dividend Discount ModelIndustry: Banks - DiversifiedSector: Financial Services

Valuation Snapshot

Stable Growth$768.53 - $2,867.39$2,303.02
Multi-Stage$361.22 - $395.05$377.83
Blended Fair Value$1,340.43
Current Price$205.12
Upside553.48%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS6.80%6.79%6.234.703.934.934.554.484.273.993.763.54
YoY Growth--32.59%19.61%-20.27%8.41%1.37%5.11%6.83%6.23%6.24%9.49%
Dividend Yield--3.04%2.65%3.00%3.62%3.14%4.30%4.08%3.99%3.56%3.78%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)20,362.00
(-) Cash Dividends Paid (M)8,800.00
(=) Cash Retained (M)11,562.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)4,072.402,545.251,527.15
Cash Retained (M)11,562.0011,562.0011,562.00
(-) Cash Required (M)-4,072.40-2,545.25-1,527.15
(=) Excess Retained (M)7,489.609,016.7510,034.85
(/) Shares Outstanding (M)1,412.261,412.261,412.26
(=) Excess Retained per Share5.306.387.11
LTM Dividend per Share6.236.236.23
(+) Excess Retained per Share5.306.387.11
(=) Adjusted Dividend11.5312.6213.34
WACC / Discount Rate7.08%7.08%7.08%
Growth Rate5.50%6.50%7.50%
Fair Value$768.53$2,303.02$2,867.39
Upside / Downside274.67%1,022.77%1,297.91%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)20,362.0021,685.5323,095.0924,596.2726,195.0327,897.7028,734.64
Payout Ratio43.22%52.57%61.93%71.29%80.64%90.00%92.50%
Projected Dividends (M)8,800.0011,401.0014,302.9417,533.9721,124.6025,107.9326,579.54

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate7.08%7.08%7.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)10,546.8710,646.8410,746.81
Year 2 PV (M)12,240.1512,473.2912,708.63
Year 3 PV (M)13,881.0514,279.5314,685.55
Year 4 PV (M)15,470.7516,065.7116,677.67
Year 5 PV (M)17,010.4017,832.0118,685.06
PV of Terminal Value (M)440,990.33462,290.32484,405.52
Equity Value (M)510,139.54533,587.69557,909.24
Shares Outstanding (M)1,412.261,412.261,412.26
Fair Value$361.22$377.83$395.05
Upside / Downside76.10%84.20%92.59%

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