Royal Bank of Canada (TSX:RY)(NYSE:RY) is one of the most prestigious financial institutions in the world and it has long been a stalwart in the portfolios of investors seeking both stability and growth. Bank stocks, unfortunately, haven’t made for exciting stocks to own of this year due to rising interest rates and concerns about the state of the economy.
For long-term investors, however, there are plenty of reasons to consider loading up on the bank stock right now. At only 10 times earnings, Royal Bank’s valuation is incredibly attractive as investors aren’t paying a premium for the top bank stock. Year to date, its shares are down around 15%. And recently, the stock has fallen into oversold territory with a Relative Strength Index (RSI) of less than 27. When a stock falls below an RSI of 30, it is considered oversold. If there isn’t any overly negative news around the stock, it can be a sign of a potential market overreaction.
Royal Bank remains a highly profitable business, posting a profit of more than $3 billion in each of its past four quarters. It also pays a relatively high dividend which yields close to 5% today. That means investors would need to invest approximately $20,000 to earn $1,000 in annual dividends. It’s a solid payout for one of the safest bank stocks you can own in the world.
With a good valuation, a solid business, and a great yield, there are no shortage of reasons to buy shares of Royal Bank right now.