Post by
Possibleidiot01 on Dec 15, 2023 2:17pm
Darren Sissons - BNN - TOP PICK
Reversion to means argument.
Royal Bank of Canada (RY TSX)
A well-known yield and total return engine currently yielding 4.4 per cent.
Canadian banks benefitted from a rise in net interest margin as interest rates re-rated from COVID-19 lock-down era lows to six per cent mortgage rates.
The expectation of higher credit losses as consumers progressively refinance low-interest rate debt into higher interest rates and the anticipation of lower net interest margin in 2024 has weighed somewhat on the franchise.
Royal Bank is well-capitalized, has a proven risk management culture and should weather a modest recession without difficulty.
The five-year annualized Total return of 3.7 per cent looks light versus its historical metrics so the franchise likely reverts towards the ten-year annualized Total Return of 10.8 per cent for investors with a reasonable timeframe.
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