Is it a good company at a reasonable price? This is one of my backbone stocks for my portfolio. I have had it for a long time and I still think of it was a great long term dividend growth stock. I have been very happy with it. However, it has slowed down in dividend growth and total returns over the years. This is to be expected as this has been a great dividend growth stock for a long time. I am looking at this stock as part of my annual review of my portfolio. I plan to hold on to the shares I have. I do not plan to buy anymore because I have enough of this stock in my portfolio.
The stock price is still within the reasonableness range, but at the top end. If you like to this stock and wish to purchase it, it would be best to purchase it over a period of years. This is often the way you get a good return on such stocks. When I reviewed this stock last year at this time, the tests results were the same. There was a hold recommendation for 2024 and the reason was the relatively high price for this stock at this time.
Because of the slow down in some of my great dividend growth stocks which I have had for a long period of time, I am looking into younger stocks. That is the reason for my research into the Propel Holding Inc (TSX-PRL, OTC-PRLPF) and Guardian Capital Group (TSX-GCG.A, OTC-GCAAF) to see if they might be future great dividend growth stocks.
I own this stock of Metro Inc (TSX-MRU, OTC-MTRAF). I bought this stock first at the end of 2001 because it is a good time to purchase as market is relatively low and Metro was on my hit list. Metro's P/E is relatively low for this stock. I brought this stock in 2004 as I was looking for something I already own, that has increasing dividends and reasonable P/E for stock at this time. By 2009, Metro stock was over 10% of my portfolio because it had grown so strong, so I sold some to reduce the percentage of it in my portfolio.
When I was updating my spreadsheet, I noticed that I again have done well on this stock. I bought it in 2004 and to the end of November 2024 I have made a 16.42% total return with 14.43% from capital gains and 1.99% from dividends. I have had this stock for 20 years. My yield on my original purchase price is 22.75%. They may have a low dividend yield (1.47% currently), but the increases are nice. Dividends have increased by 10.9% per year over the past 5 years. This is what is a good dividend growth stock.
If you had invested in this company in December 2014, for $1,026.30 you would have bought 33 shares at $31.10 per share. In December 2024, after 10 years you would have received $280.89 in dividends. The stock would be worth $2,263.47. Your total return would have been $2,544.36. This would be a total return of 10.05% per year with 8.23% from capital gain and 1.82% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.10 | $1,026.30 | 33 | 10 | $280.89 | $2,263.47 | $2,544.36 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.49. The 5, 10 and historical median dividend yields are also low at 1.62%, 1.60% and 1.50%. The dividend growth is moderate (8% to 14% ranges) at 10.9% per year over the past 5 years. The last dividend increase was in 2024 and it was for 10.74%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 32% with 5 year coverage at 29%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 30% with 5 year coverage at 28%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 14%. The DPR for 2023 for Free Cash Flow (FCF) is good at 30% with 5 year coverage at 28%. None of the sites I looked at agree on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 31.81% | 29.37% |
| AEPS | 30.41% | 28.23% |
| CFPS | 14.48% | 13.72% |
| FCF | 30.37% | 27.76% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.12 and currently at 0.12. The Liquidity Ratio for 2023 are too low at 1.08 and 1.08 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.61 and currently at 1.58. The Debt Ratio for 2023 is good at 1.99 and 1.99 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.01 and 1.01 and currently at 2.01 and 1.01.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.12 | 0.12 |
| Intang/GW | 0.32 | 0.30 |
| Liquidity | 1.08 | 1.08 |
| Liq. + CF | 1.61 | 1.58 |
| Debt Ratio | 1.99 | 1.99 |
| Leverage | 2.01 | 2.01 |
| D/E Ratio | 1.01 | 1.01 |
The Total Return per year is shown below for years of 5 to 34 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 10.88% | 12.59% | 10.96% | 1.63% |
| 2014 | 10 | 13.05% | 12.84% | 11.23% | 1.61% |
| 2009 | 15 | 14.17% | 15.50% | 13.74% | 1.77% |
| 2004 | 20 | 13.26% | 14.45% | 12.85% | 1.61% |
| 1999 | 25 | 14.78% | 16.22% | 14.38% | 1.83% |
| 1994 | 30 | 18.30% | 18.32% | 16.15% | 2.17% |
| 1990 | 34 | 21.47% | 18.77% | 2.70% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.97, 18.24 and 20.46. The corresponding 10 year ratios are 15.30, 17.55 and 19.80. The corresponding historical ratios are 12.29, 13.28 and 16.98. The current ratio is 19.08 based on a stock price of $90.15 and EPS estimate for 2025 of $4.72. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.38, 17.52 and 19.21. The corresponding 10 year ratios are 15.36, 17.36 and 19.43. The current ratio is 19.02 based on a stock price of $90.15 and AEPS for 2025 of $4.74
I get a Graham Price of $58.00. The 10-year low, median, and high median Price/Graham Price Ratios are 1.19, 1.37 and 1.51. The current P/GP Ratio is 1.55 based on a stock price of $90.15. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 2.41. The current ratio is 2.86 based on a Book Value of $7,026M, Book Value per Share of $31.55 and a stock price of $90.15. The current ratio is 18.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Book Value per Share estimate for 2025 of $32.44. This implies a ratio of 2.78 based on a stock price of $90.15 and a Book Value of $7,225M. This ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 11.00. The current ratio is 12.55 based on Cash Flow estimate for 2025 of $1,600. This ratio is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.50%. The current dividend yield is 1.49% based on a stock price of $90.15 and dividends of $1.34. The current dividend yield is 0.9% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 1.60%. The current dividend yield is 1.49% based on a stock price of $90.15 and dividends of $1.34. The current dividend yield is 7% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.79. The current dividend yield is 0.91 based on Revenue estimate for 2025 of $21,970M, Revenue per Share of $98.65 and a stock price of $90.15. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is reasonable, but towards the high end of that range. The dividend yield tests are saying that the stock price is still reasonable but above the median. The P/S Ratio test confirms this. Other testing is saying the same thing or than the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1), Hold (7) and Sell (1). The consensus would be a hold. The 12 month stock price consensus is $94.64 with a high of $98.00 and low of $71.00. The 12 month consensus price of $94.64 implies a total return of 6.47% with 4.98% from capital gains and 1.49% from dividends.
Mostly analysts on Stock Chase like this stock and a lot call it a defensive stock. Stock Chase gives this stock 3 stars out of 5. Adam Othman on Motley Fool says thinks it will remain an equally impressive stock into another year. Jitendra Parashar on Motley Fool thinks that since this company operates only in Canada it will largely insulated from cross-border trade disruptions. The company put out a press release on Newswire about their fourth quarter results for 2024.
Simply Wall Street via Yahoo Finance reviews this stock. They have no warnings out on this stock. Simply Wall Street gives this stock 3 and one half stars out of 5.
Metro is the third-largest grocery retailer in Canada (behind Loblaw and Sobeys) and also owns the top pharmacy chain in Quebec, Jean Coutu, following the 2018 acquisition. The firm also acts as a wholesaler and distributor to serve smaller, neighborhood grocery stores. Metro's operations are concentrated in Quebec and Ontario, with no presence in western Canada. Its web site is here Metro Inc.
The last stock I wrote about was about was Guardian Capital Group (TSX-GCG.A, OTC- GCAAF) ... learn more. The next stock I will write about will be Bank of Montreal (TSX-BMO, NYSE-BMO) ... learn more on Friday, January 3, 2025 around 5 pm. Tomorrow on my other blog I will write about Bike Lanes and Bloor Street.... learn more on Thursday January 2, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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