This week Royal Bank of Canada announced an dividend increase. The quarterly dividend will be increased from CA$0,91 to CA$0,94. I own 10 shares Royal Bank of Canada. This dividend increase will increase my estimated yearly dividend income with €0,77 with a estimated yield on cost of 3,90%.
Today I bought 10 shares of Royal Bank of Canada against $76,23.
Royal Bank of Canada is paying a quarterly dividend of $0,724 per share. With this purchase I’m adding $28,96 to my yearly expected dividend payments. The expected yield will be 3,8%.
The average dividend growth rate of Royal Bank of Canada is 9,7% over the last 5 years. With a payout ratio of 46% I expect it’s possible to maintain dividend growth in the near future.
It’s hard to make an estimation on the interest rate trend, but I expect the interest rates to increase in the near future as a result of the changing monetary policy of the federal reserve. The federeal reserve announced the plan to stop buying bonds on the open market and start selling bonds they own. This could result in higher interest rates, because investors could buy the bonds sold by the FED. As a result less money is available to buy newly offered bonds and as a result the interest rate should increase.
As banks tends to make higher margins when the interest rate is higher I decided to increase my exposure in the financial sector by adding Royal Bank of Canada shares.