Friday, January 15, 2021

Bank of Nova Scotia

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. Stock price seems to be cheap to reasonable. This is a dividend growth stock. See my spreadsheet on Bank of Nova Scotia.

I do not own this stock of Bank of Nova Scotia (TSX-BNS, NYSE-BNS). This is one of the big banks of Canada. All our big banks are dividend growth companies. I do not own this bank but my son owns shares.

When I was updating my spreadsheet, I noticed that like other banks, I looked at what you would have you invested in this bank over a period of time. The first one is a 35 year investment for $1,000. In December 2020 you would have received $13, 004.83 in Dividends and the value of the shares would be $19,312.16. If you made an $1,000 investment 25 years ago, by December 2020, you would have received $5.903.52 in dividends and your shares would be worth $9,246.72.

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.13%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.63%, 4.22% and $4.15%. The dividend growth over the past 5 years is low (below 8%) at 5.77% per year. The last dividend increase was in 2019 and it was for 3.4%. This was the second increase for 2019. The first increase was for 2.4%. There were no increases in 2020, total dividends increased by 3.15% from 2019 because the last increase was done late in the year.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 was 68% with 5 year coverage at 52%. The DPR for CFPS for 2020 was 8% with 5 year coverage at 24%. The sites l looked at for Free Cash Flow do not agree. WSJ says the DPR or FCF for 2020 was 22% with 5 year coverage 37%.

Debt Ratios are fine. Because this is a bank, I am looking at the Long Term Debt/Covering Assets Ratio which is fine at 0.93. The Liquidity Ratio does not matter for banks. The Debt Ratio for 2020 is 1.07. For banks, any ratio at 1.04 or higher is fine.

The Total Return per year is shown below for years of 5 to 35 to the end of 2019. 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.
2015 5 5.77% 9.55% 4.21% 5.34%
2010 10 6.27% 6.32% 1.88% 4.44%
2005 15 6.92% 6.96% 2.70% 4.26%
2000 20 10.37% 10.88% 5.96% 4.92%
1995 25 10.27% 15.53% 9.31% 6.22%
1990 30 9.30% 18.49% 10.89% 7.59%
1985 35 9.11% 14.10% 8.83% 5.27%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.02, 10.77 and 12.52. The corresponding 10 year ratios are 10.07, 11.30 and 12.51. The corresponding historical year ratios are 10.29, 11.29 and 13.20. The current P/E Ratio is 11.64 based on a stock price of $70.20 and EPS estimate for 2021 of $6.03. This stock price testing suggests that the stock price is relatively reasonable but above the median.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, 25, and 30 year periods, I find the following. For example, total return over the past 15 years is 6.96% per year, the starting P/E Ratio (the one from 15 years ago) was 16.65. From this chart’s point of view, a P/E Ratio of 11.64 would be fine.

Year Tot Return Start P/E
5 9.55% 9.87
10 6.32% 14.60
15 6.96% 16.65
20 10.88% 9.32
25 15.53% 11.54
30 18.49% 11.54

I get a Graham Price of 83.88. The 10 year low, median, and high median Price/Graham Price Ratios are 0.80, 0.88 and 0.98. The current P/GP Ratio 0.84 based on a stock price of $70.20. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.70. The current P/B Ratio is 1.35 based on a stock price of $70.20, a Book Value of $62819M, and Book Value per Share of $31.85. The current P/B Ratio is 20% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 6.48. The current P/CF Ratio is 8.78 based on a stock price of $70.20, Cash Flow per Share estimate of $8.00, and Cash Flow of $9,692M. The current ratio is 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, the problem with cash flow and banks is that cash flow is all over the place, so in this case I do not place much reliance on it.

I get an historical median dividend yield of 4.15%. The current dividend yield is 5.13% based on a stock price of $70.20 and dividends of $3.60. The current dividend yield is 24% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 4.22%. The current dividend yield is 5.13% based on a stock price of $70.20 and dividends of $3.60. The current dividend yield is 22% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 3.22. The current P/S Ratio is 2.81 based on Revenue estimate of $30,269 for 2021, Revenue per Share of $24.99 and a stock price of $70.20. The current ratio is 13% below the 10 year median ratio. This stock price testing suggests that the stock price is reasonable and below the median

Results of stock price testing is that the stock price is cheap to reasonable. Both the dividend yield tests show this stock price as relatively cheap, but it is not confirmed by the P/S Ratio test which is showing the price as reasonable. The other goods tests are the P/GP Ratio and P/B Ratio tests and these also point to cheap to reasonable.

Is it a good company at a reasonable price? I think the stock price is cheap to reasonable. It is a good dividend growth Canadian bank, so I think it is a good company to buy for its dividend. I think all Canadian dividend investors should have a couple of Canadian Banks in their portfolios.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (6), Hold (4) and Underperform (3). The consensus would be a Buy. The 12 months stock price is $69.25. This implies a total return of 3.77% with a capital loss of 1.35% and dividends of 5.13%.

Most recent analysts’ comments for this bank on Stock Chase are buy or top pick. Nicholas Dobroruka on Motley Fool says Canadian Value stocks are on sale. His picks are BNS and Sun Life. The Executive Summary for Simply Wall Street lists 3 rewards and no risks for this bank. It is given 4 stars out of 5. A writer on Simply Wall Street is unenthusiastic about BNS as a dividend stock because of low earnings growth. Financial Nirvana Mama reviews this bank on YouTube.

Bank of Nova Scotia is a global financial services provider. The bank has five business segments: Canadian banking, international banking, global wealth management, global banking, and markets, and other. The bank's international operations span numerous countries and are more concentrated in Central and South America. Its web site is here Bank of Nova Scotia.

The last stock I wrote about was about was Toronto Dominion Bank (TSX-TD, NYSE-TD) ... learn more. The next stock I will write about will be National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more on Monday, January 18, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, January 13, 2021

Toronto Dominion Bank

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. The stock price seems to be reasonable. This is a dividend growth stock and a Canadian Bank and I like both categories. Dividend yields are moderate as is the dividend growth and this is a great combination for dividends. See my spreadsheet on Toronto Dominion Bank.

I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). I bought shares in this bank at a good time in 2000 and 2009. I sold some in 2017 because they comprised more than 10% of my portfolio.

When I was updating my spreadsheet, I noticed that my total return was 12.98% per year with 8.89% from capital gains and 4.09% from dividends.

I also looked at two long term periods. If you bought shares with $1,000.40 in 1976 (42 years ago) you would have gotten 1220 shares with a price of $0.82. Today, those shares would be worth $87,742.40 and you would have collected $41,507.27 in dividends. If you bought shares 32 years ago, cost would be $4.45 per share and you would have gotten 224.72 shares. Today those shares would be worth $16,161.86 and you would have collected dividends worth $7,433.13. (Note that the chart below and Total Return shows a low about for the past 30 years.)

The dividend yields are moderate with dividend growth moderate. The current dividend is moderate (2% to 4% range) at 4.26%. The 5, 10 and historical dividend yields are also moderate at 3.93%, 3.73% and 3.50%. the dividends have been increased moderately (8% to 14% ranges) at 9.23% per year over the past 5 years. The last increase was in 2020 and it was for 6.8%.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 48% with 5 year coverage at 45%. The DPR for CFPS is 49% with 5 year coverage at 32%. The DPR for Free Cash Flow is anyone’s guess. Morningstar says that the FCF is $230,079M and WSJ says a negative $28,453M.

Debt Ratios are fine. Because this is a bank, you look for covering assets, so Long Term Debt/Covering Assets Ratio is fine at 0.71. The Liquidity Ratio really does not matter for banks. The Debt Ratio is 1.06 and anything at 1.04 or above is fine for banks.

The Total Return per year is shown below for years of 5 to 45 to the end of 2019. 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.
2015 5 9.23% 10.08% 5.80% 4.28%
2010 10 9.81% 10.92% 6.84% 4.09%
2005 15 9.57% 9.50% 5.87% 3.63%
2000 20 10.03% 9.52% 6.17% 3.36%
1995 25 11.18% 15.44% 10.45% 4.99%
1990 30 9.77% 14.46% 9.97% 4.49%
1985 35 10.36% 13.27% 9.31% 3.96%
1980 40 10.49% 15.17% 10.33% 4.84%
1975 45 10.93% 15.34% 10.51% 4.82%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.50, 11.76 and 13.03. The corresponding 10 year ratios are 10.93, 12.17 and 13.30. The corresponding historical ratios are 11.42, 11.40 and 13.84. The current P/E Ratio is 12.87 based on a stock price $74.11 and EPS estimate for 2021 of $5.76. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $80.34. The 10 year low, median, and high median Price/Graham Price Ratios are 0.6, 0.94 ad 1.03. The current P/GP Ratio is 0.92 based on a stock price of $74.11. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.61. The current P/B Ratio is 1.49 based on a Book Value of $95,499M, Book Value per Share of $49.80 and a stock price of $74.11. The current P/B Ratio is 8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 3.16. The current P/CF Ratio is 0.46 based on Cash Flow for the last 12 months of $231,789M, Cash Flow per Share of $127.63 and a stock price of $74.11. The current ratio is 85% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The problem with this current Cash Flow is that it is way out of line with past normal amounts for Cash Flow. I do not find P/CF Ratio helpful in analyzing bank stocks.

We might be better off using Cash Flow less Working Capital in this instance. The 10 year median Price/Cash Flow per Share less Working Capital is 9.18. The current P/CF Ratio (less WC) is 9.28. The current ratio is 1.09% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median, or around the median.

I get an historical median dividend yield of 3.50%. The current dividend yield is 4.26% based on a stock price of $74.11 and dividend of 3.16%. The current dividend is 22% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 3.73%. The current dividend yield is 4.26% based on a stock price of $74.11 and dividend of 3.16%. The current dividend is 14% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 3.16. The current P/S Ratio is 3.43 based on Revenue estimate for 2021 of $39,261M, Revenue per Share of $21.62, and a stock price of $74.11. The current ratio is 9% 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 probably reasonable. The stock price is cheap or reasonable and below the median according to dividend yield testing, but reasonable and above the median in P/S Ratio testing. So, they both agree it is reasonable. Analysts are expecting a 10% decline in Revenue and this is probably due to problems Covid. Most testing is showing the stock price as reasonable.

Is it a good company at a reasonable price? I do think the stock price is reasonable. This is a dividend growth stock, which is the sort I like. I also like Canadian Banks. I like this one and I own it.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2), Hold (8), and Underperform (3). The consensus would be a Hold. The 12 month stock price consensus would be $74.43. This implies a total return of $4.705 with 0.43% from capital gains and 4.26% from dividends. Analysts overall do not seem to expect much movement in price.

Analyst on Stock Chase like this bank along with Royal. Andrew Button on Motley Fool talks about 2020 earnings spike which was due to TD selling TD Ameritrade to Charles Schwab. He says the banks has strong earnings and a 4.26% yield so it is a great stock. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5. It says a risk is an unstable dividend track record and this is not true. Kevin Orland on Bloomberg talks about the trial where trustees for Stanford investors is trying to recover US $4.5B from the bank. The Blogger Dividend Earner did a recent review of this stock. On YouTube there is analysis of this bank at Ask Pramod Kumar. Geoff Zochodne on the Financial Post talks about the Schwab-TD Ameritrade deal.

Toronto-Dominion is one of Canada's two largest banks and operates three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. The bank's U.S. operations span from Maine to Florida, with a strong presence in the Northeast. It also has a 42% ownership stake in TD Ameritrade, a discount brokerage. Its web site is here Toronto Dominion Bank.

The last stock I wrote about was about was Calian Group Ltd) ... learn more. The next stock I will write about will be Bank of Nova Scotia (TSX-BNS, NYSE-BNS) ... learn more on Friday, January 15, 2021 around 5 pm. Tomorrow on my other blog I will write about Telus, Gordon Pape.... learn more on Thursday, January 14, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, January 11, 2021

Calian Group Ltd

Sound bite for Twitter and StockTwits is: Dividend Paying Tech. Stock price seems relatively expensive currently. They have no long term debt and debt ratios are good. See my spreadsheet on Calian Group Ltd.

I own this stock of Calian Group Ltd (TSX-CGY, OTC-CLNFF). This is an interesting company with a dividend. This stock came up on a Globe Investor site. The Globe Investor Number Cruncher is an investment column about screening for stocks and funds. They did one on companies with little to no debt. I also noted that the Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list.

When I was updating my spreadsheet, I noticed that the stock price went up a lot this year. I have done well in this stock. I have had this stock for almost 10 years and my total return to the end of last year was 20.86% per year with 16.98% per year from capital gains and 3.88% per year from dividends. The current dividend yield is 1.73%, but I am getting on my original investment a yield of 6.19%. One problem is that they have not raised the dividend since 2013.

The dividend yields are low with dividend growth non-existent. The current dividend yield is low (below 2%) at 1.73%. The 5 year and historical median dividend yields are moderate (2% to 4% range) at 3.65% and 4.28%. The 10 year dividend yield is good (5% and 6% ranges) at 5.31%. They have not raised the dividend since 2013. They have paid dividends for 17 years and have raised them in 10 of these years.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 50% with 5 year coverage at 52%. The DPR for CFPS for 2020 is 29% with 5 year coverage at 34%. The DPR for FCF for 2020 is 116% with 5 year coverage at 73%. Not all sites agree on FCF.

Debt Ratios are good. There is no current long term debt. The Liquidity Ratio for 2020 is 1.85. The Debt Ratio for 2020 is 2.53. The Leverage and Debt/Equity Ratios for 2020 are 1.65 and 0.65

The Total Return per year is shown below for years of 5 to 27 to the end of 2019. 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.
2015 5 0.00% 36.91% 32.57% 4.34%
2010 10 3.55% 17.33% 13.60% 3.73%
2005 15 8.71% 17.32% 12.81% 4.51%
2000 20 11.73% 20.50% 15.46% 5.04%
1995 25 12.78% 10.46% 2.32%
1993 27 10.57% 8.74% 1.82%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.66, 13.02 and 14.38. The corresponding 10 year ratios are 11.06, 12.56 and 14.12. The corresponding historical ratios are 9.54, 11.29 and 12.69. The current P/E Ratio is 31.21 based on a stock price of $64.60 and EPS estimate for 2021 of $2.07. This stock price testing suggests that the stock price is relatively expensive.

It is interesting that when I have done the high, median, and low for years ending in December, the P/E Ratios were consistently higher than above when the year used ended in September each year. The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.29, 14.36 and 16.27 (with a December year-end). The corresponding 10 year ratios are 11.34, 13.82 and 15.30 (with a December year-end). The corresponding historical ratios are 10.03, 11.57 and 17.06 (with a December year-end). The financial year for this company ends in September each year.

Even when I look at 2022 when the EPS is expected to rise, rather than fall as it is expected to do in 2021, the P/E Ratio is still relatively high at 23.66 based on a stock price of $64.60 and EPS Estimate for 2022 of $2.73.

I get a Graham Price of $30.92. The 10 year low, median, and high median Price/Graham Price Ratios are 0.98, 1.07 and 1.18. The current P/GP Ratio is 2.09 based on a stock price of $64.60. 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 2.20. The current P/B Ratio is 3.15 based on a Book Value of $200M, Book Value per Share of $20.53 and a stock price of $64.60. The current ratio is 43% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Cash Flow per Share Ratio of 10.76. The current P/CF Ratio is negative so no testing can be done. I can look at the Cash Flow less Working Capital. Here the 10 year median P/CF Ratio is 8.53. The current P/CF Ratio is 16.52 based on last 12 months of Cash Flow less WC of $38M, Cash Flow per Share less WC of $3.91 and a stock price of $64.60. The current ratio is 94% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. I talk about this subject of cash flow less working capital here.

I get an historical median dividend yield of 4.28%. The current dividend yield is 1.73% based on a dividend of $1.12 and a stock price of $64.60. The current dividend is 62% below the historical median dividend. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median dividend yield of 5.31%. The current dividend yield is 1.73% based on a dividend of $1.12 and a stock price of $64.60. The current dividend is 67% below the historical median dividend. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.66. The current P/S Ratio is 1.34 based on a stock price of $64.60, Revenue estimate for 2021 of $471M, and Revenue per Share of $48.26. The current P/S Ratio is 104% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably relatively expensive. The dividend yield tests say this and is confirmed by the P/S Ratio test. However, dividend yield is probably not a good test because dividends have not been raised since 2013. However, all the test says the same thing, that the stock price is relatively expensive.

Is it a good company at a reasonable price? I plan to stay invested in this stock because I still believe in it. I still hope it will turn back into a dividend growth stock, but shareholders are currently being rewarded as the capital gains have been good. It is probably expensive at the moment, but the whole stock market is high presently.

When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (4). The consensus would be a Strong Buy. The 12 month stock price consensus is $74.29. This implies a total return of 16.73% with 15% from capital gains and 1.73% from dividends. This is a lot lower in capital gains that occurred over the past 2 years.

Analysts like this stock on Stock Chase but site gives it 3 stars out of 5. Adam Othman Motley Fool says to buy for capital growth, not dividends. The Executive Summary on Simply Wall Street gives the stock 4 stars out of 5 and list two risks. A writer on Simply Wall Street says that the stock price is growing faster than EPS. Kevin Ford, CEO of the company is interviewed on C-Suite.

Calian Group Ltd is a Canadian company offering professional services. Calian Group Ltd operates through four segments namely Advanced Technologies, Health, Learning, and Information Technology. It generates maximum revenue from the Health segment. Its web site is here Calian Group Ltd.

The last stock I wrote about was about was Rogers Sugar Inc (TSX-RSI, OTC-RSGUF) ... learn more. The next stock I will write about will be Toronto Dominion Bank (TSX-TD, NYSE-TD) ... learn more on Wednesday, January 13, 2021 around 5 pm. Tomorrow on my other blog I will write about Questions for ESG Investors.... learn more on Tuesday, January 12, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, January 8, 2021

Rogers Sugar Inc

Yesterday, I purchased Smart Centres REIT (TSX-SRU. OTC-CWYUF) for my TFSA. The stock price is reasonable and the dividend yield currently is 7.94%. I was looking for a stock to buy because of my 2021 deposit into my TFSA and I thought that a REIT would be a good idea. This is still a beaten down REIT. I use my TFSA account mostly for speculation.

Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. The stock price seems reasonable. The dividend is good at 6.42% and is probably safe. Once DPR for EPS is good, dividends might increase. There is insider buying. See my spreadsheet on Rogers Sugar Inc.

I do not own this stock of Rogers Sugar Inc (TSX-RSI, OTC-RSGUF). This stock was brought to my attention by Dividend Ninja. This company used to be an Income Trust (TSX-RSI.UN) but it has been converted to a corporation. On its change to a corporation, it lowered its dividend.

When I was updating my spreadsheet, I noticed they may finally be getting their DPR for EPS under control. This stock used to be an Income Trust. As an Income Trust they could pay out more than the EPS is dividends and mainly Income Trusts did. When they became a corporation, they decreased the dividend by 26% and went from monthly dividends to quarterly dividends. Since then, they had a DPR for EPS mostly over 100%. Analysts expect the DPR for EPS to be 84% in 2021 and go lower from there. They do not have a good track record for dividends. Of the 22 years that they have paid dividends, there has been 9 increases and 5 decreases and the rest of the time the dividends have been flat.

The dividend yields are good with dividend growth non-existent. The current dividend is good (5% and 6% ranges) at 6.42%. The 5 and 10 year median dividend yields are also good at 6.23% and 6.25%. The historical median dividend yield is high (7% range and higher) at 9.09%. The very high dividend yields of this company in the past is typical of Income Trust companies. Once they get their DPRs under control, it might become a dividend growth stock.

The Dividend Payout Ratios (DPR) are getting better. The DPR for EPS for 2020 was 106% with 5 year coverage at 116%. Analysts expect this to decline in 2021 is around 84%. The DPR for CFPS for 2020 is 41% with 5 year coverage also at 41%. The DPR for Free Cash Flow for 2020 is 100% with 5 year coverage at 99%. (Site I looked at seemed to agree on FCF.)

Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio for 2020 is good at 0.63. The Liquidity Ratio or 2020 is good at 1.72. The Debt Ratio for 2020 is a bit low at 1.44, but has a 5 year median that is better at 1.67. I like to see this ratio at 1.50 or higher. Leverage and Debt/Equity Ratios are too high at 3.28 and 2.33. I prefer these to be under 3.00 and under 2.00. The 5 year median ratios are better at 2.29 and 1.29.

The Total Return per year is shown below for years of 5 to 23 to the end of 2019. 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.
2015 5 0.00% 13.43% 5.76% 7.67%
2010 10 -2.42% 7.76% 0.49% 7.26%
2005 15 -0.71% 12.64% 2.81% 9.83%
2000 20 -3.82% 10.57% 1.22% 9.35%
1997 23 -2.97% 4.57% -2.08% 6.65%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.38, 13.72 and 15.19. The corresponding 10 year ratios are 13.08, 14.70 and 16.46. The corresponding historical ratios are 9.82, 10.73 and 11.89. The current P/E Ratio is 13.05 based on a stock price of $5.61 and EPS estimate for 2021 of $0.43. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $4.98. The 10 year low, median, and high median Price/Graham Price Ratios are 1.02, 1.16 and 1.30. The current P/GP Ratio is 1.13 based on a stock price of $5.61. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.90. The current P/B Ratio is 2.19 based on a stock price of $5.61, Book Value of $265M and a Book Value per Share of $2.56. 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. The reason for the higher P/B Ratio is that the book value to not growing. It has grown by 0% per year over the past 5 years.

I get a 10 year median Price/Cash Flow per Share Ratio of 11.70. The current P/CF Ratio is 10.39 based on CFPS estimate for 2021 of $0.54, Cash Flow of $55.9M and a stock price of $5.61. The current ratio is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 9.09%. The current dividend yield is 6.42% based on a stock price of $5.61 and dividends of $0.36. The current dividend yield is 29% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This stock used to be an income trust and these stocks had high dividend yields. This is why the historical median dividend yield is so high.

I get a 10 year median dividend yield of 6.25%. The current dividend yield is 6.42% based on a stock price of $5.61 and dividends of $0.36. The current dividend yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.83. The current P/S Ratio is 0.67 based on Revenue estimate for 2021 of $863M, Revenue per Share of $8.34 and a stock price of $5.61. The current ratio is 19% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Results of stock price testing is that the stock price is probably reasonable. The 10 year median dividend yield test shows that it is reasonable and below the median and this is confirmed by the P/S Ratio test. Because this company was an income trust, I do not expect the same tests results for the historical dividend yield test. However, I think it is a problem that the Book Value is not growing.

Is it a good company at a reasonable price? The stock price seems reasonable. The dividend is good, but do not expect any increase anytime soon. When the DPR gets under control, dividends might increase. However, there is a trade off between dividend yield and dividend growth. This is not a dividend growth company at present and it is hard to say if it would become one in the future. However, it is not in a growth industry.

When I look at analysts’ recommendations, I find Buy (1) and Hold (4). The consensus would be a Hold. The 12 month stock price is $5.60. This implies a total return of 6.24% with a capital loss of $0.18% and dividends of $6.42%.

There are few analysts comments on Stock Chase for this stock. The last one says Don’t Buy. Christopher Liew on Motley Fool thinks the stock is cheap with a great dividend. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 with 3 risk factors. A writer on Simply Wall Street wonders about the company’s ability to handle its debt. Brian Madden on BNN says this is not a growth stock and it will never be one.

Rogers Sugar Inc is a Canada based sugar producing company. The company along with its subsidiaries is principally engaged in refining, packaging, and marketing sugar products. The products offered by the company include iced tea mix, stevia, yellow sugar, Cubes, Coconut sugar, and other related sugar products. Its geographical segments include Canada, which is the key revenue generator; the United States; Europe; and others. Its web site is here Rogers Sugar Inc.

The last stock I wrote about was about was Royal Bank of Canada (TSX-RY, NYSE-RY) ... learn more. The next stock I will write about will be Calian Group Ltd) ... learn more on Monday, January 11, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, January 6, 2021

Royal Bank of Canada

Yesterday I sold my shares of Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF). I bought them for speculation in 2013. I think that Covid has really killed this company and I cannot see any recover in the future or any recovery anytime soon. I lost 32.10% per year on this. My capital loss is 97%. I did make dividends so my total loss is 79%.

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. The stock price is probably reasonable. I have personally done well with this stock. The DPR are fine and they have been paying dividends for a very long time (since 1870). See my spreadsheet on Royal Bank of Canada.

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). In 1995 I bought this stock and this is the second bank stock that I have bought. At the time I bought this stock it was on Mike Higgs' list of Canadian Dividend Growth Stocks and on the dividend lists I followed as were all the banks. Since buying this stock in 1995, I have had a return of 17.01% per year. This is made up of Capital Gain at 11.17% per year and Dividends at 5.84% per year.

When I was updating my spreadsheet, I noticed I also looked at how much you would have made if you paid $1,000 for shares some years ago. In this one the $1,000 was paid in 1988 and you would have gotten 211.86 shares. At the end of 2020 those should would be worth $22,159.48 and you would have received $10,575.27 in dividends. A reason to buy dividend growth stocks.

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.10%. The 5, 10 and historical dividend yields are also moderate 4.04%, 3.93% and 3.99%. The dividend growth is currently low (under 8%) at 6.19% per year over the past 5 years. The last dividend increase was in 2020 and it was for 2.9%. However, the Royal Bank does do two increases each year. Dividends were increased by 6.50% in 2020. The dividend increases used to be in the moderate range (8% to 14% ranges). See chart below.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 54% with 5 year coverage at 47%. The DPR for CFPS for 2020 is 45% with 5 year coverage at 41%. In looking at Free Cash Flow, sites do not even come close to agreeing. Morning Star says DPR for FCF for 2020 is 4% with 5 year coverage at 23%, Wall Street Journal says the DPR for FCD for 2020 is 40% with 5 year coverage at 48%.

Debt Ratios are fine. Since this is a bank, I am looking at the Debt/Covering Assets Ratio which is good at 0.72. For banks, the Liquidity Ratio is not important. The Debt Ratio is for 2020 is 1.06 and a ratio of 1.04 and above are fine for banks.

The Total Return per year is shown below for years of 5 to 37 to the end of 2019. 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.
2015 5 6.19% 11.46% 7.12% 4.34%
2010 10 7.58% 11.41% 7.17% 4.24%
2005 15 8.01% 9.68% 5.86% 3.82%
2000 20 9.61% 11.36% 7.43% 3.92%
1995 25 10.77% 16.43% 11.04% 5.39%
1990 30 9.42% 14.90% 10.20% 4.69%
1985 35 8.48% 13.97% 9.53% 4.44%
1983 37 8.01% 13.18% 9.01% 4.17%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.31, 11.61 and 12.92. The corresponding 10 year ratios are 10.41, 11.53 and 12.80. The corresponding historical ratios are 7.46, 11.85 and 13.68. The current P/E Ratio is 12.44 based on a stock price of $107.10 and EPS 2021 estimate of $8.61. This stock price testing suggests that the stock price is relatively reasonable but above the median.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, 25, 30, 35 and 37 year periods, I find the following. For example, total return over the past 15 years is 9.68% per year, the starting P/E Ratio (the one from 15 years ago) was 17.35. From this point of view, a P/E Ratio is 12.44 would be fine.

Year Tot Return Start P/E
5 11.46% 11.02
10 11.41% 15.12
15 9.68% 17.35
20 11.36% 14.21
25 16.43% 8.74
30 14.90% 7.56
35 13.97% 9.52
37 13.18% 11.47

I get a Graham Price of $104.95. The 10 year low, median, and high median Price/Graham Price Ratios are 0.91, 1.01 and 1.10. The current P/E Ratio is 1.02 based on a stock price of $107.10. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.96. The current P/B Ratio is 1.88 based on a Book Value of $80,959M, Book Value per share of $56.86 and a stock price of $107.10. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 7.29. The current P/CF Ratio is 9.92 based on a stock price of $107.10, Cash Flow per Share estimate for 2021 of $10.80 and a Cash Flow of $15,387. The current P/CF Ratio is 36% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The P/CF Ratios have varied a lot over the past 10 years from a low of negative 35.60 to a positive 12.49. I wonder how good this testing is for the bank.

I get an historical median dividend yield of 3.93%. The current dividend yield is 4.03% based on dividends $4.32 and a stock price of $107.10. The current dividend yield is 1% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.99%. The current dividend yield is 4.03% based on dividends $4.32 and a stock price of $107.10. The current dividend yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 3.01. The current P/S Ratio is 3.35 based on Revenue estimate for 2021 of $45,560M, Revenue per share of $32.00 and a stock price of $107.10. The current ratio is 11% 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 probably reasonable. The dividend yield tests say reasonable and below the median. The P/S Ratio test says reasonable and above the median. So, we know the price isn’t cheap, but it can be at reasonable. The good tests seem to say reasonable and above or below the median.

Is it a good company at a reasonable price? The stock price is probably reasonable. This is a Dividend Growth Canadian Bank. As with all Canadian Banks, this one has a long history of paying dividends. They have increased the dividend paid 28 years in the past 37 years.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (3) and Hold (5). The consensus would be a Buy. I agree on this rating. The 12 month stock price consensus is $111.59. This implies a total return of 8.23% with 4.19% from capital gains and 4.03% from dividends.

Most analysts on Stock Chase like this bank and think it is a buy. Debra Ray on Motley Fool lists this bank as one of the top three banks to buy in 2021. The executive summary at Simply Wall Street gives this bank 4 stars out of 5 and list 3 rewards and no risks. A writer on Simply Wall Street would like to see better earnings growth to recommend this stock as a good dividend stock. The blogger Dividend Earner did a recent analysis of all Canadian Banks.

Royal Bank of Canada is one of the two largest banks in Canada. It is a diversified financial services company, offering personal and commercial banking, wealth-management services, insurance, corporate banking, and capital markets services. The bank is concentrated in Canada, with additional operations in the U.S. and other countries. Its web site is here Royal Bank of Canada.

The last stock I wrote about was about was Bank of Montreal (TSX-BMO, NYSE-BMO) ... learn more. The next stock I will write about will be Rogers Sugar Inc (TSX-RSI, OTC-RSGUF) ... learn more on Friday, January 8, 2021 around 5 pm. Tomorrow on my other blog I will write about Something to Buy January 2021.... learn more on Thursday, January 07, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, January 4, 2021

Bank of Montreal

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. The stock price is probably reasonable. I have done well with this bank over the years. There is some insider buying. Dividend yields are often in the 4% range. See my spreadsheet on Bank of Montreal.

I own this stock of Bank of Montreal (TSX-BMO, NYSE-BMO). When I bought this stock in 1983, I thought it was the best bank stock to buy at that time. I have only tracked it since 1987 in Quicken. I have a return of 15.21% per year with 8.55% from capital gains and 6.86% per year from dividends.

When I was updating my spreadsheet, I noticed I also looked at this stock for long term good returns. If you bought shares in December 1988, 32 years ago for $1,000, you would have bought 142.86 shares. By December 2020 you would have BMO shares worth $13,825.99 and have collected $8,895.89 in dividends. Not as good as for Metro, but still fine. The 30 year return on this stock is 15.69% per year with 9.00% per year from capital gains and 6.69% per year from dividends.

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.38%. The 5, 10 and historical dividend yields are also moderate at 4.14%, 4.29% and 4.47%. The dividend growth is low (below 8% per year) with dividend growth at 5.51% per year over the past 5 years. See also the chart below for other durations. The last dividend increase was for just 2.9% in 2020.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 56% with 5 year coverage at 48%. The DPR for CFPS is 40% with 5 year coverage at 33%. The DPR for Free Cash Flow is negative in 2020 with a 5 year coverage at 27%. (Site do not agree on FCF.)

Debt Ratios are fine. This is a bank, so we check that they have assets to cover their liabilities. Their Debt/Assets Ratio is fine at 0.95. Liquidity Ratio for banks doesn’t matter. The Debt Ratios for banks should be 1.04 or above and this bank has one of 1.06 currently. Leverage and Debt/Equity Ratios are fine for a bank at 16.77 and 15.77.

The Total Return per year is shown below for years of 5 to 37 to the end of 2019. 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.
2015 5 5.51% 8.79% 4.39% 4.40%
2010 10 4.16% 9.93% 5.35% 4.59%
2005 15 5.63% 7.70% 3.49% 4.21%
2000 20 7.45% 8.78% 4.61% 4.17%
1995 25 7.79% 13.08% 7.60% 5.48%
1990 30 7.15% 15.69% 9.01% 6.69%
1985 35 6.34% 12.10% 7.16% 4.95%
1983 37 5.99% 12.80% 7.41% 5.39%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.05, 11.12 and 12.61. The corresponding 10 year ratios are 10.06, 11.23 and 12.44. The corresponding historical ratios are 10.51, 11.38 and 13.50. The current P/E Ratio is 11.51 based on a stock price of $96.78 and EPS estimate for 2021 of $8.41. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The Total Return per year is shown below for years of 5, 10, 15, 20, 25, 30 and 31 year periods, I find the following. For example, total return over the past 15 years is 7.70% per year, the starting P/E Ratio (the one from 15 years ago) was 12.46. From this point of view, a P/E Ratio is 11.51 would be fine for an 8% to 9% total return.

Year Tot Return Start P/E
5 8.79% 11.88
10 9.93% 12.10
15 7.70% 12.46
20 8.78% 12.09
25 13.08% 9.17
30 15.69% 6.93
35 12.10% 7.72
37 12.80% 11.71

I get a Graham Price of $122.53. The 10 year low, median, and high median Price/Graham Price Ratios are 0.73, 0.83 and 0.92. The current P/GP Ratio is 0.79 based on a stock price of $96.78. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.41. The current P/B Ratio is 1.22 based on a stock price of $96.78, Book Value of $51,245M and a Book Value per Share of $79.34. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I have to wonder if the Price/Cash Flow Ratio test is any good for this stock. Last year the Cash Flow was up 73%, but when I excluded working capital, the Cash Flow was down 37%. Last 12 months in Cash Flow seems unusual.

I get an historical median dividend yield of 4.47%. The current dividend yield is 4.38% based on dividends of $4.24 and a stock price of $96.78. The current dividend yield is 2% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 4.29%. The current dividend yield is 4.38% based on dividends of $4.24 and a stock price of $96.78. The current dividend yield is 2% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 2.50. The current P/S Ratio is 2.65 based on Revenue estimate for 2021 of $23,629M, Revenue per Share of $36.58 and a stock price of $96.78. The current ratio is 7% 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 probably reasonable. The dividend tests show the stock price as reasonable but above and below the median. The P/S Ratio test shows that the stock price is reasonable but above the median. All the tests that I have done show the stock as reasonable and above or below the median.

Is it a good company at a reasonable price? All the major Canadian banks have been paying dividends for a very long time and mostly have been dividend growth stocks. If you are a Canadian, you should probably have a couple of Canadian Banks in your portfolio. I like dividend growth stocks that deliver Total Returns over the longer term at 8%. This bank mostly does this.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (1), Hold (8), and Underperform (2). The consensus would be a Hold. The 12 months stock price consensus is $100.80. This implies a total return of 8.53% with 4.15% from capital gains and 4.38% from dividends.

A few analysts on Stock Chase mention that BMO is not their favourite bank. Nicholas Dobroruka on Motley Fool give this bank as one of his top picks for 2021. He mentions that this bank has paid dividends for 190 years. A writer on Simply Wall Street finds this bank interesting because of rising earnings and insider buying. The executive summary on Simply Wall Street gives this bank 4 stars out of 5 and lists 3 rewards and no risks. Bloggers on Stock Trades review this stock.

Bank of Montreal is a diversified financial-services provider based in North America, operating four business segments: Canadian P&C banking, U.S. P&C banking, wealth management, and capital markets. The bank's operations are primarily in Canada, with a material portion also within the U.S. Its web site is here Bank of Montreal.

The last stock I wrote about was about was Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more. The next stock I will write about will be Royal Bank of Canada (TSX-RY, NYSE-RY) ... learn more on Wednesday, January 06, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks January 2021.... learn more on Tuesday, January 05, 2020 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, January 1, 2021

Metro Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. Stock price is probably reasonable, but at the top end of the reasonable range. This is a good Dividend Growth Stock. They have good DPRs. My total return to date is 16.84% per year since buying this stock in 2004. See my spreadsheet on Metro Inc.

I own this stock of Metro Inc (TSX-MRU, OTC-MTRAF). I was following this stock before I bought it because it was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I was following. I have owned this stock since 2004 in my Trading account. I have a Total Return of 16.84% per with 14.81% per year from capital gains and 2.03% from dividends. My original yield at purchase as 1.87%. My current yield on my purchase price is 15.28%.

When I was updating my spreadsheet, I noticed I calculated a what if question. This was if you had 25 years ago in 1992 bought 1275 share at $1007.25, those shares at the end of December 2020 would have been worth $72,420 and you would have received $8,500.34 in dividends. This is why you buy dividend growth stock for the long term.

The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 1%) and 1.58%. The 5, 10 and historical dividend yields are also low at 1.53%, 1.55% and 1.45%. They have paid dividends for the past 25 years and have raised the dividend every year for the past 25 years. The dividend growth is often good (15% and higher) but sometimes it is moderate (8% to 15% ranges). See chart below. The dividends increased by 14% per year for the past 5 years. The last dividend increase was in 2020 and it was for 12.5%. Dividend increases have varied over the past 25 years.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 is 28% with 5 year coverage at 20%. The DPR for CFPS is 13% with 5 year coverage at 15%. The DPR for Free Cash Flow is 24% with 5 year coverage at 35%. None of the sites I looked at agreed on FCF, but they were not that far apart.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.16. It is good and low. The Liquidity Ratio is low at 1.34, but if you add in Cash Flow after Dividends it is healthy at 1.91. The Debt Ratio is good at 1.85. The Leverage and Debt/Equity Ratios are fine at 2.18 and 1.18.

The Total Return per year is shown below for years of 5 to 30 to the end of 2019. 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.
2015 5 14.22% 9.49% 7.95% 1.54%
2010 10 15.02% 15.93% 14.19% 1.74%
2005 15 13.65% 13.63% 12.15% 1.48%
2000 20 15.58% 16.91% 15.06% 1.84%
1995 25 19.59% 17.32% 15.48% 1.83%
1990 30 22.16% 19.67% 2.49%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.03, 17.52 and 20.01. The corresponding 10 year ratios are 12.13, 14.39 and 16.45. The corresponding historical ratios are 10.01, 11.81 and 14.58. The current P/E Ratio is 16.96 based on a stock price of $56.80 and EPS Estimate for 2021 of $3.35. This stock price testing suggests that the stock price is relatively expensive.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, and 25 year periods, I find the following. For example, total return over the past 15 years is 13.70% per year, the starting P/E Ratio (the one from 15 years ago) was 15.89. From this point of view, a P/E Ratio is 17.13 might be on the high side. However, the P/E Ratios have been rising for some time.

Year Tot Return Start P/E
5 9.71% 19.27
10 16.04% 12.38
15 13.70% 15.89
20 16.96% 11.08
25 17.36% 11.80

I get a Graham Price of 42.96. The 10 year low, median, and high median Price/Graham Price Ratios are 1.02, 1.20 and 1.38. The current P/GP Ratio is 1.32 based on a stock price of $56.80. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.15. The current P/B Ratio is 2.32 based on a stock price of $56.80, Book Value of $6,142M and Book Value per Share of $24.49. The current ratio is 8% 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 12.16. The current P/CF Ratio is 13.62 based on Cash Flow per Share estimate of $4.17, Cash Flow of $930.8M and a stock price of $56.80. The current ratio is 12% 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 1.46%. The current dividend yield is 1.58% based on dividends of $0.90 and a stock price of $56.80. The current dividend yield is 8.5% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median dividend yield of 1.55%. The current dividend yield is 1.58% based on dividends of $0.90 and a stock price of $56.80. The current dividend yield is 2.5% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.68. The current P/S Ratio is 0.79 based on Revenue estimate for 2021 of $18,134M, Revenue per Share of $72.31 and a stock price of $57.38. The current ratio is 17% above the 10 year median P/S 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 probably reasonable. The dividend yield tests show the stock price as reasonable and below the median, but this is not confirmed by the P/S Ratio test which shows the stock price as reasonable but above the median. The rest of the testing shows that the stock price is reasonable but above the median except for the P/E Ratio test which shows the stock price as expensive.

Is it a good company at a reasonable price? This is a dividend growth stock and that is why I like it. The DPR and Debt Ratios are also fine on this stock. The price might be on the high side of reasonable, but it is still within a reasonable range.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), Hold (8) and Underperform (1). The consensus would be a Hold. The 12 month stock price is $62.58. this implies a total return of 10.63% with 9.06% from capital gains and 1.57% from dividends.

The last couple of entries on Stock Chase says to wait before buying. Christopher Liew on Motley Fool says the shares of this company are rising as people are buying recession-resistant proof investments.. A writer on Simply Wall Street likes this stock from a dividend perspective. A writer on Simply Wall Street is getting uncomfortable with the increasing P/E Ratio of this company. The Blogger Dividend Earner reviewed this stock in June of 2020.

Metro is one of the largest grocery retailers in Canada and, following its 2018 acquisition of the Jean Coutu Group, also boasts a meaningful drugstore footprint. Noteworthy grocery banners include Metro, Metro Plus, Super C, and Food Basics, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. Its web site is here Metro Inc.

The last stock I wrote about was about was Element Fleet Management Corp (TSX-EFN, OTC-ELEEF) ... learn more. The next stock I will write about will be Bank of Montreal (TSX-BMO, NYSE-BMO) ... learn more on January 04, 2021 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.

See my website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, December 30, 2020

Element Fleet Management Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. The stock price is probably reasonable. See my spreadsheet on Element Fleet Management Corp.

I do not own this stock of Element Fleet Management Corp (TSX-EFN, OTC-ELEEF). I was looking for stocks to follow and I found this stock in 100 best Dividend Stocks Money Sense for 2018. It was also on Raymond James' top 19 Canadian stocks for 2019 list.

When I was updating my spreadsheet, I noticed that they are growing their Revenue quite well, but not their EPS. However, analyst expect better EPS in the future. Revenue grew by 24% per year over the past 5 years and Revenue per share by 13% per year. Revenue also grew by 90% per year over the past 8 years and Revenue per Share by 50% per year over the past 8 years. EPS is down by 4% per year over the past 5 years. Eight years ago, EPS was negative. However, analyst expect EPS growth of 417% in 2020 to EPS at $0.62. In 2021 EPS is expected to be $0.82 and then $0.91 in 2022.

The dividend yields are low with dividend growth good. The current dividend yield is low (below 2%) at 1.97. The 3 year median dividend yields are moderate (2% to 4% ranges) at 2.08%. Dividends have only been paid since 2016. The dividend growth rate is 21.6% per year over the past 3 years. Although dividends have increased for 2 years and decreased for 1 year in the past 3 years. The last dividend increase occurred in 2020 and it was for 44%.

The Dividend Payout Ratios (DPR) are fine, or will be. The DPR for EPS for 2019 was 150% with 3 year coverage at 371%. Analysts expect the DPR for EPS to be around 42% in 2020. The DPR for CFPS for 2019 was 8% with 3 year coverage at 27%. The DPR for Free Cash Flow for 2019 was 11% with 5 year coverage at 247%. (But here again sites do not agree with each other about the FCF for each year.)

Debt Ratios need improvement. The Long Term Debt/Market Cap is high at 2.48. However, the company has assets to coverage the debt. The Assets to Debt Ratio is 0.96. This is a financial company, so Assets to Debt Ratio is what counts. The Liquidity Ratio for 2019 is 0.73. However, if you added in Cash Flow after dividends, the ratio is good at 1.71. The Debt Ratio is lower than what I like at 1.28. I prefer this to be at 1.50 or higher, but this is a financial company, so there is more leeway in this. The Leverage and Debt/Equity Ratios are too high at 5.56 and 4.35. I prefer these to be low than 3.00 and 2.00, but finance companies tend to have higher ratios.

The Total Return per year is shown below for years of 5 to 8 to the end of 2019. 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.
2014 5 21.64% 8.27% 0.02% 8.26%
2011 8 18.22% 11.26% 6.96%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.11, 29.17 and 28.89. The corresponding 8 year ratios are 9.72, 11.61 and 13.50. The current P/E Ratio is 21.24 based on a stock price of $13.17 and EPS estimate for 2020 of $0.62. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $9.92. The 8 year low, median, and high median Price/Graham Price Ratios are 1.12, 1.45 and 1.71. The current P/GP Ratio is 1.33 based on a stock price of $13.17. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an 8 year median Price/Book Value per Share Ratio of 1.18. The current P/B Ratio is 1.87 based on a stock price of $13.17, Book Value per Share of $7.05 and a Book Value of 43,054M. The current P/B Ratio is 58% above the 8 year ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an 8 year median Price/Cash Flow per Share Ratio of 8.91. The current P/CF Ratio is 16.88 based on a stock price of $13.17, Cash Flow per Share estimate for 2020 of $0.78 and Cash Flow of 338M. The current ratio is some 89% above the 8 year ratio. This stock price testing suggests that the stock price is relatively expensive.

Analysts expect that Cash Flow per Share would decrease by some 67% in 2020. The Cash Flow per Share estimate for 2021 is $0.78 and Cash Flow of 455M. Based on a stock price of $13.17m this gives a P/CF Ratio of 12.54. The 9 year P/CF Ratio for 2021 is 10.18. This P/CF Ratio is 23% above the 9 year ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical and 3 year median dividend yield of 2.08%. The current dividend yield is 1.97% based on dividends of 0.26 and a stock price of $13.17. The current dividend yield is 5% below the 3 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 8 year median Price/Sales (Revenue) Ratio is 6.77. The current P/S Ratio 5.99 based on Revenue estimate for 2020 of $953, Revenue per Share of $2.20 and a stock price of $13.17. The current ratio is 12% below the 8 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Results of stock price testing is that the stock price is probably reasonable. The P/S Ratio testing suggests that the stock is reasonable. The dividend yield test says the same thing. Although, I must admit most of the other rest show that the stock price is relatively expensive. However, I take the view that Revenue is what ultimately drives EPS and Cash Flow.

Is it a good company at a reasonable price? I think that this is an interesting company, but it is rated as risky. The price would seem to be current reasonable. It has only been paying dividends since 2016, but they have been inconsistent in dividend increases, but will probably be a dividend growth company.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (8) and Underperform (1). The consensus is a Buy. The 12 month stock price consensus is $15.88. This implies a total return of 22.55% with 20.58% from capital gains and 1.97% from dividends

There are few entries on Stock Chase, but the last on March 2020 is positive. Amy Legate-Wolfe on Motley Fool thinks this company is a strong buy if you have little money. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and 4 points of risk analysis. A writer on Simply Wall Street says the rise in total shareholder return over the past year points to the company doing better recently. Global New Wire on Yahoo Finance talks about the company’s Third Quarter.

Element Fleet Management provides management services and financing for commercial vehicle and equipment fleets. The company's suite of fleet management services deals with acquisition and financing, to program management and remarketing. Its web site is here Element Fleet Management Corp.

The last stock I wrote about was about was Bird Construction Inc (TSX-BDT, OTC-BIRDF) ... learn more. The next stock I will write about will be Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more on January 1, 2021 around 5 pm. Tomorrow on my other blog I will write about Pembina Pipelines.... learn more on Thursday, December 31, 2020 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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