Royal Bank Dividend Per share per Quarter. $$

2015: Q1 = 0.75 Q2 = 0.77 Q3 = 0.77 Q4 = 0.79

2016: Q1 = 0.79 Q2 = 0.81 Q3 = 0.81 Q4 = 0.83

2017: Q1 = 0.83 Q2 = 0.87 Q3 = 0.87 Q4 = 0.91

2018: Q1 = 0.91 Q2 = 0.94 Q3 = 0.94 Q4 = 0.98

2019: Q1 = 0.98 Q2 = 1.02 Q3 = 1.02 Q4 = 1.05

TD Bank Dividend Per share per Quarter. $$

2015: Q1 = 0.47 Q2 = 0.51 Q3 = 0.51 Q4 = 0.51

2016: Q1 = 0.51 Q2 = 0.55 Q3 = 0.55 Q4 = 0.55

2017: Q1 = 0.55 Q2 = 0.60 Q3 = 0.60 Q4 = 0.60

2018: Q1 = 0.60 Q2 = 0.67 Q3 = 0.67 Q4 = 0.67

2019: Q1 = 0.67 Q2 = 0.74 Q3 = 0.74 Q4 = 0.74

Other Information:

Recent Price of Stock: RY = $ 83.50 TD = $ 55.10

Annual Profit 2019: RY = $13 Billion TD = $11.7 Billion

Dividend Payout Ratio: RY = 46% TD = 43%

ROE: RY = 17.6% TD = 15.6%

2020 Annual Dividend Est.: RY = $ 4.20 TD = $ 3.11

Required:

A. The market expects this pattern of dividend increases to continue therefore, calculate the cost of equity for RY and TD. Show all work in detail.

B. If the both banks were not planning to raise external financing, then what will their respective growth rates be? Show all work in detail.

C. Identify some advantages and disadvantages of the Dividend growth model.

D. Given results above, would you recommend or not recommend either, both or neither as an investment instrument and why?

E. Given recent global events, what caveats or conditions might you add to your comments above?