Then and Now – Royal Bank
Welcome to another Then and Now post, a continuation of my series where I revisit some older blogposts and either rip them to shreds (because my thinking has changed on such subjects) or I’ll confirm my position on various personal finance topics or specific stock and ETF investments.
You can check out my previous posts in this series about these stocks below:
Today’s post is about a Canadian dividend paying stalwart: Royal Bank.
- I started writing about this stock back in March 2012 but I was a shareholder over a year before then.
- My reasoning to own this stock was very simple – maybe too simplistic – buying what you know can make sense.
Devout indexer, successful author, speaker and more Larry Swedroe mentioned in a popular article at the time that buying what you know is a bad investment strategy.
I dared to disagree with Larry.
I looked at the TSX 60 index at that time, and I found it was full of the following stocks that seemed to pay dividends and offer capital gains too.
Companies that delivered intuitive products or services:
- People need to bank.
- People need insurance.
- People like heating and cooling their homes.
- People love their cellphones.
You get the idea….
The TSX 60 represented by low-cost ETF XIU was full of the following stocks:
- Major financial companies (including Royal Bank, Bank of Montreal, CIBC, Bank of Nova Scotia, among others)
- Major energy and utility companies (Enbridge, Suncor, Canadian Natural Resources, TransCanada, Fortis, and Emera)
- Major telecommunications companies (Bell Canada, Rogers, Telus – all listed in the top-30 Canadian stocks by market capitalization.)
Instead of owning XIU, although I did for a brief period of time, by owning Royal Bank stock directly I was starting the process to unbundle my Canadian ETF for passive income.
Larry certainly disagreed with my thinking almost a decade ago and was kind enough to offer a few comments for that blogpost to convince me otherwise.
His knowledge and expert insights were duly noted by me, but they certainly didn’t stop me from investing in Royal Bank even further to this day.
- At the time of this post, Royal Bank will be releasing its latest quarterly earnings soon.
- Last time I checked, since my decision to start buying this stock, it appears I invested in a company that has historically delivered exactly what I was seeking – a mix of growing dividend income and capital gains too. A bunch of both actually!
- Thanks to one of the handy calculators on Royal Bank’s site, I could look back at my investing history (when I started getting very serious as a dividend investor) to see what my returns have been since the winter of 2010 with my original investment:
- Well, Royal Bank’s dividend payment to me has doubled.
- The share price continues to climb – at the time of this post – in a pandemic no less.
My Royal Bank Decision is one of buy and DRIP and hold
Will Royal Bank continue to pay juicy dividends for the coming decades?
I believe so although any individual stock let alone the broad market future is always unknown.
But I can say that I will continue to hold Royal Bank for dividend income and capital gains for the foreseeable future along with many other Canadian and U.S. stocks for income.
By owning this stock, I’ve seen money that makes money, makes more money.
By owning my mix of individual stocks and low-cost ETFs, I figure I posses an amazing 1-2 investing approach that matches my tolerance for investing risk and one that helps me meet my semi-retirement income and growth needs.
Thanks for reading and stay tuned for another Then and Now article in the future.
What do you make of my decision to disagree with an expert? Did I just get lucky?
Do you invest in Royal Bank like I do?
Let me know in a comment below!