Friday, October 2, 2009

AGF Management

I am reviewing this stock (TSX- AGF.B) today as I received the November 2008 annual report and I have not reviewed it since I received this report. I held this stock at one time, but sold, as I did not think this stock was going anywhere. They have maintained a position on the dividend lists of Dividend Achievers at and Dividend Aristocrats list at (see indices). (Note the new address for Dividend Achievers list.)

I usually like stocks on these dividend lists, as they are generally good dividend paying stocks. However, this stock has only maintained their listings because they have increased their dividends by paying out more and more of the cash flow. You expect some fluctuations in payout of cash flow, but not for the dividends to take a bigger and bigger portion of the cash flow. This stock will potentially pay out around 50% of expected cash flow.

Going on to the growth figures, we are dealing with a rather mixed bag. The dividend growth is over 26% per year for the last 5 years and over 22% per year for the last 10 years. However, the last good dividend increase was in 2008 and there has been no dividend increase this year. The growth in cash flow is not bad being 11.5% per year over the last 5 years and 8.8% per year over the last 10 years. However, growth in stock price over the last 5 years has been negative at -10% per year and there has been no growth over the last 10 years.

Turning to the Asset/Liability ratios, I find the A/L Ratio low, in the 1.20 range. I would prefer this at 1.50, but at least it is over 1.00. The liquidity ratio is also very low, being around 0.50. I like the liquidity ratio to be 1.50 also. With a liquidity ratios as low as it is, this means that the current assets cannot cover the current liabilities.

This used to be a great stock. I do not think that it has really recovered from the last bear market and it is hard to say how it will handle the current one. At the moment, I am not interested in this stock, but I will look at what the analysts say about it on Monday.

AGF is a Mutual Fund company. It owns AGF Trust Company. The company has a diversified group of products designed to meet a variety of investment objectives including GICs, term deposits, real estate secured loans, investment loans and home equity lines of credits. They sell their products in Canada. Its web site is See my spreadsheet at

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 for a list of the stocks for which I have put up spreadsheets.

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