Q: Hello 5!, I am considering to sell holdings in RIT:CA and buy Royal Banks shares as they seem to have a better future for growth while paying decent dividends today. Your thought, on this matter, would be appreciated. Thank you in advance
5i Research Answer:
It is very tough to compare a diversified REIT ETF with a single bank. The ETF's inherent diversity (it owns 10 securities) of course provides a diversification cushion over single company risk. But, potential upside is likely higher with RY. The dividend is lower but gains, under the right conditions, should be better. We would also see RY as having more dividend growth potential. We would be comfortable with this but only if an investor understands the shift in diversification from such a move.