Royal Bank of Canada (NYSE:RY) and Banco Santander-Chile (NYSE:BSAC) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.
Risk and Volatility
Royal Bank of Canada has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Banco Santander-Chile has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current ratings and target prices for Royal Bank of Canada and Banco Santander-Chile, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Royal Bank of Canada | 1 | 4 | 3 | 0 | 2.25 |
| Banco Santander-Chile | 0 | 3 | 2 | 0 | 2.40 |
Royal Bank of Canada currently has a consensus price target of $112.60, suggesting a potential upside of 42.93%. Banco Santander-Chile has a consensus price target of $31.00, suggesting a potential upside of 47.48%. Given Banco Santander-Chile’s stronger consensus rating and higher possible upside, analysts clearly believe Banco Santander-Chile is more favorable than Royal Bank of Canada.
Profitability
This table compares Royal Bank of Canada and Banco Santander-Chile’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Royal Bank of Canada | 19.07% | 17.04% | 0.93% |
| Banco Santander-Chile | 20.90% | 15.93% | 1.26% |
Dividends
Royal Bank of Canada pays an annual dividend of $3.23 per share and has a dividend yield of 4.1%. Banco Santander-Chile pays an annual dividend of $0.83 per share and has a dividend yield of 3.9%. Royal Bank of Canada pays out 48.3% of its earnings in the form of a dividend. Banco Santander-Chile pays out 52.9% 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 raised its dividend for 3 consecutive years and Banco Santander-Chile has raised its dividend for 1 consecutive years. Royal Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
42.0% of Royal Bank of Canada shares are owned by institutional investors. Comparatively, 12.6% of Banco Santander-Chile shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Royal Bank of Canada and Banco Santander-Chile’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Royal Bank of Canada | $50.86 billion | 2.21 | $9.68 billion | $6.69 | 11.78 |
| Banco Santander-Chile | $3.49 billion | 2.84 | $952.53 million | $1.57 | 13.39 |
Royal Bank of Canada has higher revenue and earnings than Banco Santander-Chile. Royal Bank of Canada is trading at a lower price-to-earnings ratio than Banco Santander-Chile, indicating that it is currently the more affordable of the two stocks.
Summary
Royal Bank of Canada beats Banco Santander-Chile on 10 of the 16 factors compared between the two stocks.
Royal Bank of Canada Company Profile
Royal Bank of Canada operates as a diversified financial service company worldwide. The company’s Personal & Commercial Banking segment offers check and savings accounts; home equity and auto financing, personal lending, private banking, mutual fund, self-directed brokerage account, and guaranteed investment certificate services; and credit cards, and payment products and solutions for individuals. It also provides lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, and trade products and services to small and medium-sized commercial businesses. In addition, this segment offers international financing and trade promotion services through branches, automated teller machines, and online and mobile banking. The company’s Wealth Management provides investment, trust, banking, credit, and other wealth management solutions to high and ultra-high net worth clients; and asset management products to institutional and individual clients through its distribution channels and third-party distributors. Its Insurance segment offers life, health, home, auto, travel, wealth, annuities, and reinsurance advice and solutions; and creditor and business insurance services to individual, business, and group clients through its field sales force, advice centers, and online, as well as through independent insurance advisors and affinity relationships. The company’s Investor & Treasury Services segment provides asset, cash management, transaction banking, and treasury services to institutional clients; correspondent banking and trade finance services for financial institutions; and short-term funding and liquidity management services. Its Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, sale, and trading services for corporations, institutional investors, asset managers, governments, and central banks. The company was founded in 1864 and is headquartered in Toronto, Canada.
Banco Santander-Chile Company Profile
Banco Santander-Chile provides commercial and retail banking products and services in Chile. It operates through Retail Banking, Middle-Market, and Global Corporate Banking segments. The company offers checking accounts and savings products; consumer, auto, commercial, mortgage, and government-guaranteed loans; credit and debit cards; and Chilean peso and foreign currency denominated loans to finance various commercial transactions, trade, foreign currency forward contracts, and credit lines. It also provides mutual funds, insurance and stock brokerage, foreign exchange, leasing, factoring, financial consulting, investment management, foreign trade and mortgage financing, treasury, and transactional services, as well as specialized services to finance projects for the real estate industry. In addition, the company offers short-term financing and fund raising, brokerage services, derivatives, securitization, and other tailor-made products. It serves individuals, small to middle-sized entities, companies, and large corporations, as well as universities, government entities, and local and regional governments. The company operates 380 branches, which include 266 under the Santander brand name, 46 under the Select brand name, 7 specialized branches for the middle market, and 21 as auxiliary and payment centers, as well as 910 ATMs. Banco Santander-Chile was founded in 1977 and is headquartered in Santiago, Chile.
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