Is Royal Bank Stock a Buy Despite its Struggles in 2025?

Every time Royal Bank’s share price jumps or dips, I get messages from readers and our Premium members asking the same thing—should I buy now, or wait? Is this company still one of the best stocks to buy in Canada?

Based on what I’m seeing, I think Royal Bank stock is still one of the most reliable long-term buys for Canadian portfolios, especially for RRSPs or TFSAs. But that doesn’t mean it’s without risk, or that you should go in blindly.

What really sets Royal Bank apart is its consistent performance—even in rough economic waters. The market keeps wrestling with inflation, interest rates, and shifting regulations, but Royal’s business model and recent moves (like the HSBC Canada deal) make it stand out.

That deal could be a game changer over the next few years, not just for its growth, but also for how it positions the bank against its competition.

Royal Bank of Canada Overview

Royal Bank of Canada, or RBC, is the largest company in Canada by market cap. I’ve noticed that nearly every Canadian portfolio—whether in an RRSP or TFSA—seems to include this stock for good reason.

RBC covers almost every area of the country in terms of financial services. Personal banking, commercial banking, wealth management, capital markets, insurance, you name it.

This gives the bank multiple streams of revenue and allows it to handle economic ups and downs better than many smaller lenders.

Segment	Contribution to Profit (Approximates)
Personal Banking	~40%
Wealth Management	~25%
Insurance	~10%
Capital Markets & Other	~25%

Being a bank stock holder, I keep tabs on the Canadian financial sector, and RBC stands out for its scale and stable loan book.

The bank’s footprint stretches beyond Canada. With the expansion of its wealth management arm in the U.S. and international markets, RBC isn’t just tied to the Canadian economy.

In my experience, RBC’s leadership in digital banking is a major edge. The bank consistently ranks high in customer satisfaction and innovation, which matters to younger investors and helps retain clients for decades, especially with the difficulties the major banks are facing when it comes to challenger banks like Equitable.

How Royal Bank Is Navigating Today’s Macro Environment

The Canadian economy is in rough shape. However, I see Royal Bank adapting well and borderline thriving. Despite a rough economy over the last few years, Royal still manages to turn out solid earnings growth.

The bank’s net interest margins have benefited from successive Bank of Canada rate hikes, padding its bottom line. Yes, rates are coming down, but they’re still relatively elevated compared to even pre-pandemic. At the same time, management has stayed cautious with its lending, not chasing risky growth just to post bigger numbers.

When I dig into the bank’s credit quality, I notice RY is staying disciplined. Loan loss provisions are modest, especially compared to some smaller lenders. That says to me the bank is keeping tighter standards for who borrows and what kinds of loans it books.

The Canadian consumer loan market feels dicey, and I’m glad Royal Bank is tightening the reins when it comes to credit.

Yes, household debt remains high—mortgages, lines of credit, you name it. But RY’s large, diversified loan book means it isn’t overexposed to any single risky sector. The breakdown looks something like this:

Loan Category	% of Portfolio	Recent Trend
Mortgages	~50%	Slow growth
Business/Commercial	~33%	Stable demand
Personal Lending	~17%	Slight decline

Liquidity management gets my respect too. Royal Bank maintains strong capital ratios, and its funding mix is more conservative than most U.S. banks I follow. This is more a sign of strict Canadian regulations, however.

Risk remains, no question, but I like how the leadership team is not letting short-term market noise force reactionary decisions. They’re treating risk like a long game—staying liquid, focusing on prime borrowers, and building reserves when needed.

That’s not flashy, but for a pillar stock on the TSX, it’s exactly what I want to see.

The HSBC Acquisition: A Long-Term Catalyst or Short-Term Drag?

RBC’s $13.5 billion deal to buy HSBC Canada isn’t your typical bolt-on. This acquisition instantly adds a new layer of banking and opens more doors for Canadian clients with international needs. I see a rare chance here for RBC to deepen its cross-border relationships, especially with newcomers and international businesses.

To break it down simply:

Key Factor	Impact on RBC
Cost synergies	Higher, but ramp up over time
Market share	Largest in Canadian banking
Client diversification	Improved, especially internationally
Integration risk	Moderate (systems, staff, culture)

RBC expects cost synergies, but integration—tech, staff, cultures—takes time. As someone who’s watched big bank mergers before, I wouldn’t expect instant results. There’s no shortage of transition friction, and clients may notice some longer wait times or changes in service as banks merge systems.

Still, the big picture is hard to ignore. Losing HSBC Canada means Canada now has one less competitor on rates, which may worry some mortgage shoppers. But for long-term investors, RBC’s dominance grows. The bank now stretches even further ahead of the pack, which can matter for steady dividend growth, which is a big draw of these banks.

Valuation, Dividend, and Return Outlook

When I look at Royal Bank’s current numbers, I see a valuation that lines up with its blue-chip status. The stock trades at a price-to-earnings ratio of about 15.6, which is in line with its 5- and 10-year averages, and a bit above some of the other Big 6 banks.

For a bank of this size, that premium doesn’t surprise me. Royal Bank’s price-to-book ratio also remains steady, but with the quality of the loan book, I’m not all that surprised.

Here’s a quick side-by-side of some useful metrics:

Metric	Royal Bank (RY)	Big 6 Peer Average
P/E Ratio	15.6	12-14
P/B Ratio	~1.8	1.2-1.5
Dividend Yield	3.5%	4-5%
Dividend Payout Ratio	~49%	45-55%

Royal’s dividend remains a draw, and the yield is now 3.5%—lower than some peers, but the trade-off is steady growth.

The payout ratio sits around 49%, giving the bank room to raise dividends further, or retain capital if needed. Over the past decade, Royal Bank has shown reliable dividend growth, even in slower years, outside of when regulators forced them to stop dividend growth during the pandemic.

Looking ahead, my take is that Royal Bank’s prospects depend on Canada’s economic recovery and interest rate trends. If earnings continue to rise as analysts expect, total shareholder returns could be solid. However, valuations remain relatively high. But what do you expect from a company so solid.

So, Is Royal Bank a Buy Today?

After a strong rebound since April, Royal Bank is trading near recent highs. Some investors might wonder if they’ve missed their window. As a shareholder, I don’t see it that way—Royal is a proven long-term performer and continues to look attractive, even at these price levels.

One risk is the Canadian housing market. Royal Bank is Canada’s biggest mortgage lender. If we see rising defaults due to a softer economy, it could lead to more provisions.

Still, Royal has experience managing credit cycles, and its diversified business model—including wealth management and capital markets—gives it stability.

I’d buy Royal Bank for a long-term account all day. Even if the market hits a rough patch, RY has proven it can weather downturns.

For income-focused investors, the reliability of the dividend stands out. Patience tends to pay off with blue-chip Canadian banks—Royal Bank is near the top of my list for a core holding.