IGM Financial

I am reviewing this stock (TSX-IGM) today as I have just received its annual report. I bought this stock in 2006, and so far, I have only lost money on it. This is not surprising as our market is back to prices that were last seen in about 2004. When I last look at this stock in August 2008, I got earnings estimates of around $3.25. The earnings come in lower at $2.78 undiluted. Earnings estimates are coming in at a lower level for 2009 and 2010. The stock price will not really pick up until analysts start to think that the earnings will pick up.

The first thing to mention is that this stock is on everyone’s great dividend paying stock lists. This stock is on the Dividend Achievers list at www.dividendachievers.com, the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm. This is because the dividends have been growing at just over 15% per year for the last 5 years. Also, the yield on this stock has been good, as it has been averaging around 3% per year.

A lot of the growth figures on this stock are good, but very few are great, especially for the last 5 years. What has been good is the growth in dividends, the Asset/Liabilities Ratio (which is at 2.01) and the Return on Equity (ROE). When we are in a bear market, the Asset/Liabilities Ratio is very important and anything over 1.50 is good. This stock has this ratio at 2.01. This means that they have twice the assets needed to pay off the liabilities. What this means is that this company will very much survive the current bear market. The ROE for 2008 was 17.7% and the 5 year average was 19.6%. These are also good figures.

The only real negative thing that I see is the Accrual Ratio is high at 5.57%. The problem is that the cash flow from operations is lower than the net income. What you want to see is the opposite. I lot of people have very much liked this stock over the years. It is part of the Power Corp group of companies and their companies tend to be run well. I am certainly going to hold on to my stock at the present.

This is a premier mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. Its web site is www.igmfinancial.com. See my spreadsheet on this company at www.spbrunner.com/stocks/igm.htm.

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. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.