Analyzing Shinhan Financial Group (NYSE:SHG) and Royal Bank Of Canada (NYSE:RY)

Royal Bank Of Canada (NYSE:RY) and Shinhan Financial Group (NYSE:SHG) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Dividends

Royal Bank Of Canada pays an annual dividend of $4.96 per share and has a dividend yield of 2.5%. Shinhan Financial Group pays an annual dividend of $1.70 per share and has a dividend yield of 2.3%. Royal Bank Of Canada pays out 43.4% of its earnings in the form of a dividend. Shinhan Financial Group pays out 22.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Royal Bank Of Canada has increased its dividend for 15 consecutive years. Royal Bank Of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Royal Bank Of Canada and Shinhan Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Bank Of Canada	$98.11 billion	2.75	$14.54 billion	$11.43	17.05
Shinhan Financial Group	$19,124.33 billion	0.00	$3.48 billion	$7.44	10.03

Royal Bank Of Canada has higher earnings, but lower revenue than Shinhan Financial Group. Shinhan Financial Group is trading at a lower price-to-earnings ratio than Royal Bank Of Canada, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

45.3% of Royal Bank Of Canada shares are owned by institutional investors. Comparatively, 7.8% of Shinhan Financial Group shares are owned by institutional investors. 1.0% of Shinhan Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Royal Bank Of Canada and Shinhan Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Bank Of Canada	0	5	7	1	2.69
Shinhan Financial Group	0	1	1	0	2.50

Royal Bank Of Canada presently has a consensus price target of $225.00, indicating a potential upside of 15.46%. Given Royal Bank Of Canada’s stronger consensus rating and higher probable upside, equities analysts clearly believe Royal Bank Of Canada is more favorable than Shinhan Financial Group.

Risk and Volatility

Royal Bank Of Canada has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500.

Profitability

This table compares Royal Bank Of Canada and Shinhan Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royal Bank Of Canada	16.17%	17.79%	0.97%
Shinhan Financial Group	15.69%	8.63%	0.66%

Summary

Royal Bank Of Canada beats Shinhan Financial Group on 14 of the 18 factors compared between the two stocks.

About Royal Bank Of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company's Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.