Royal Bank Stock Going Up?

Every once in a while I stumble upon a stock chart that has some good forecasting patterns. I guess because I have some money in a Dividend Mutual Fund that includes Canadian Bank stocks such as Royal Bank - I follow the charts on a casual basis. This forecast will not change anything I do with money....it is just for academic amusement.

Contrary to what you might have heard, there are recurring patterns in stock price charts, and some times, they have predictive value. In this case, Royal Bank has been down for the last 4 months or so and the question is...will it go back up soon or what? I noticed that it appears to have just completed a bottom pattern that predicts a minimum increase to near $59. There's more... this apparent short-term bottom, and turn upwards, is consistent with the Elliott Wave Count. In addition, because the last high was $60, there's a good chance that a turn upwards, at this time, will carry on to new highs above $60.

The Bank of Montreal (BM), down from $73 for the last 5 months, may also be on the threshold of completing a short-term bottom and turning upwards pattern as well. This one needs a little more time to clarify.

I also see that the TD Bank recently completed a bottom pattern and rocketed to a new high. Yesterday's free-fall drop for TD is a normal reaction following a very fast advance...likely very temporary.

It will be interesting to follow what happens here.

Stocks That Pay Dividends

The Royal Bank has been doing very well in recent years. In addition to capital appreciation, it is currently paying a 3.1 % dividend rate. I think one needs to consider both the potential for dividends and the stock price appreciation. The chart says it all.

I have also recently discovered that one can purchase mutual funds that include only stocks that pay dividends.

One fund I took a quick look at today was the TD Dividend Growth - I. It pays a 3.4% dividend and contains 63 stocks. The majority of the fund seems to be in the Canadian Banking sector. The top holdings include; the Royal Bank, the Toronto Dominion Bank, CIBC Bank, and the Bank of Nova Scotia. It is a no load fund, RRSP eligible, has minimum purchase amounts of $100 initial and $100 additional. The MER seems reasonable at 1.97%.

If I decided to move toward owning dividend paying stocks I think I would prefer the mutual fund approach rather than buying individual stocks. I like the lower risk with diversification and the lower initial investment amounts. For example, to buy Royal Bank shares at $58 per share one would need a lot more than $100 to get started.