Power Corp of Canada

Sound bite for Twitter and StockTwits is: Dividend Growth Stock. The way to make money long term is buy good dividend growth companies when they are cheap (or at least at a reasonable price) and hold on to them. This company is rather cheap and it is a dividend growth company. See my spreadsheet on Power Corp of Canada.

I do not own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs' list. It is a stock that I notice has been recommended lately as good value (October 2008). I would not buy it because I have shares in Power Financial, which this company controls. My son owns this company as he bought it instead of Power Financial.

Currently, the dividend yield on this stock is good with low growth. The current dividend yield is 4.91% based on dividends of $1.43 and a stock price of $29.19. The 5 year median is 4%. The growth over the past 5 and 10 years is 4% and 5.6% per year. There was no dividend growth from 2010 and 2014 inclusive and this is why dividend growth has been quite low lately.

This company is in financial services and these sorts of company have had a hard time coming out of the last recession. They own a lot of insurance companies and insurance companies especially had a hard time dealing with very low interest rates.

This company used to have moderate dividend yields and good growth. The dividends used to be in the 2% range and the dividend increases in the 17% range. I do not see this happening again with the very low interest rates. It is hard to say how long we will have very low interest rates. These sorts of things go on longer than you image.

The stock has picked up recently. Over the past 5 years the stock has a total return of 9.37% per year with 4.76% per year from capital gains and 4.61% per year from dividends. The 10 year return is lousy with a total return of 1.89% per year with a capital loss of 1.59% per year and dividends of 3.49% per year.

I have data on this company back to 1987, so I took a look at 15 and 20 year returns. The total return over the past 15 years is 6.72% per year with 2.93% per year from capital gains 3.78% per year from dividends. The total return over the past 20 years is 12.35% per year with 7.65% per year from capital gains and 4.69% per year from dividends. This is rather quite a good longer term return. That is why I buy and hold for the longer term.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.54, 12.46 and 13.38. The corresponding 10 year ratios are 10.96, 13.12 and 14.37. The historical ratios are 10.97, 13.10 and 15.00. The current P/E Ratio is 12.37 based on a stock price of $29.19 and EPS estimate for 2017 of 2.36. This stock price testing suggests that the stock price is relatively reasonable and around the median or slightly below the median.

I get a Graham Price of $46.56. The 10 year low, median and high median Price/Graham Price Ratios are 0.75, 0.92 and 1.06. The current P/GP Ratio is 0.63 based on a stock price of $29.19. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Book Value per Share Ratio is 1.34. The current P/B Ratio is 0.72 a values some 46% lower. The current P/B Ratio is based on BVPS of $40.82 ($18,932M BV) and a stock price of $29.19. This stock price testing suggests that the stock price is relatively cheap.

I get an historical dividend yield is 2.30%. The current dividend yield is 4.91% based on a stock price of $29.19 and dividends of $1.43. The current dividend yield is some 113% higher than the historical dividend yield. Even the 5 year median dividend yield is 23% lower at 4%. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy and Hold Recommendations. Most of the recommendations are a Hold so the consensus recommendations would be a Hold. The 12 month stock price consensus is $33.29. This implies a total return of 18.96% with 14.05% from capital gains and 4.91% from dividends. To me these figures do not match up as it is a good return for a Hold recommendation.

Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. Some of it subsidiary companies include Power Financial, the Pargesa group and Gesca and Square Victoria Digital Properties. Its web site is here Power Corp of Canada.

Sandrine Rastello and Gerrit De Vynck via Bloomberg writes in the Globe and Mail about Power Corp inviting in FinTech to spur innovation in the company. They see FinTech as the future. Staff writers at The Standard talks about some technical indicators for this stock. The RSI indicators show that the stock is neither under or overvalued. Marguerite Chambers on Huron Report talks about recent analysts ratings for this company. See what analysts are saying about this company on Stock Chase. Views vary widely on this company.

The last stock I wrote about was about was Liquor Stores N. A. Ltd. (TSX-LIQ, OTC-LQSIF)... learn more. The next stock I will write about will be Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN)... learn more on Friday, June 16, 2017 around 5 pm. Tomorrow on my other blog I will write about Investing Easy... learn more on Thursday, June 15, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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