Friday, April 29, 2011

Barclays Bank PLC ADR 2

I bought this bank (NYSE-BCS) in April 2000. It was doing quite well earning a total return of 15% per year in US$ until it started to fall apart at the end of 2007. They cut out the dividend in the first part of 2009 and restore a much smaller dividend at the very end of that year. To date, I have earned a total return of 3.5% on this stock in US$.

I must admit that I have a much harder time finding information on US and other foreign stock than for Canadian stock. Maybe this is because I follow so few non-Canadian stocks. However, a number of sites say that there have been no insider transactions over the past 6 months. Also, apparently insiders own some 10.5% of the outstanding shares.

When I look at 5 year median Price/Earnings Ratios, I get one of 7.53 for the 5 year low and one of 11.68 for the 5 year high. The current one of 9.03 would be close to the 5 year median average of 9.61. I get a Graham Price of $35.66US for 2011 and the current stock price of $19.68US is some 44% lower. Even though the difference between the Graham Price and low Stock price has been 27% on average over the past 10 years, the difference between these two values has recently been higher.

I get a 10 year median Price/Book Value Ratio 1.90 and a current one of 0.63. The current one of 0.63 is some 38% lower than the 10 year median and this show a good current stock price. However, note that the 5 year average P/B Ratio is just 0.67 because this ratio has been low lately.

The current yield on this stock is 3.3%. This stock has a 5 year median yield 4 %. Considering that the dividends were decreased by some 97% in 2009, this is probably not a bad yield for this stock. The dividends, of course, have been increasing lately by substantial amounts.

When I look at analysts recommendations, what I find are some Strong Buy and Hold recommendations. (See my site for information on analyst ratings.) The consensus recommendations would be a Buy. There seems to be a divergence of opinion. Analysts giving Hold recommendations give a 12 month stock price of $22US and those with Strong Buy give a 12 month stock price of $32.32US. I have also noticed that EPS estimates have recently come down for 2011; but they have gone up for 2012.

I found one site talking about Barclays Bank at Financial 8. Also,
Vivalabolsa says Barclays has upside potential to $32.32 over 12 months. See page bottom for remarks on this bank and other banks.

For the present, I will be keeping this stock. However, I am keeping an eye on it.

This is a bank. Barclays is a global financial services provider, engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services all over the world. Its web site is here Barclays. See my spreadsheet at bcs.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 for stocks followed and investment notes. Follow me on twitter.

Thursday, April 28, 2011

Barclays Bank PLC ADR

I bought this bank (NYSE-BCS) in April 2000. It was doing quite well earning a total return of 15% per year in US$ until it started to fall apart at the end of 2007. They cut out the dividend in the first part of 2009 and restore a much smaller dividend at the very end of that year. To date, I have earned a total return of 3.5% on this stock in US$.

I have this stock in a US$ account and I only take out money from this account when the US$ to CDN$ is favorable to me. Needless to say, I have not done this lately, as our currency is rather high against the US currency. I have this stock in a US$ account to moderate my currency risk.

When it got into trouble, I paid a lot of attention. I believe that you get out of a stock if it will not survive or that the company is so damaged it can only limp on. However, I kept this because I knew it would survive and come back again. It has been coming back. However, their survival came at a cost. There was a large dilution of the shares of this bank (a 73% increases in shares.)

Also, I know it did not accept government money because it did not want to be told what to do by bureaucrats. One cannot assume that bureaucrats will make better decisions than the company’s officers will. In fact, bureaucrats generally make worse decisions as far as I can see. Government run industries have an awful track record.

I know the reason that the papers gave of management not wanting to give up their peaks and this is why they did not take government money. But the press has a very negative view of business and this would be a typical press remark. And, was the latest crisis the fault of the bankers or us? It was us who could not stop taking out loans (credit or house) which we could never pay back.

If you are investing for the long term, then you are going to have investments where the company gets into trouble at some point. I had a number of companies decrease dividends in 2009. This happens in a recession and/or bear market.

Now, I shall go back to talking about Barclays Bank. According to my spreadsheet, if you had held this stock over the last 5 years you would have lost a lot at a rate of 11.5% per year. If you had this bank for 10 years, you probably would have lost ½ your capital, however, if you include dividend payments, your loss would probably be around 11% or 12%.

It is not all bad news. Revenue for this bank has increased by about 5% per share per year over the past 10 years. Although Book Value per share has decreased since 2008, it is up by 9% per year over the past 5 years and up 6.7% per year over the past 10 years.

Also, even though Barclays’ cash flow and earnings are down significantly, they have not suffered a loss in either over the past few years. The Return on Equity for the end of 2010 was 8.9%.

Currently, I plan to hold on to my Barclay shares.

This is a bank. Barclays is a global financial services provider, engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services all over the world. Its web site is here Barclays. See my spreadsheet at bcs.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 for stocks followed and investment notes. Follow me on twitter.

Wednesday, April 27, 2011

Melcor Developments Inc 2

I first bought this stock (TSX-MRD) in July 2008 and some more in August 2008 and April 2009 and July 2009. I have made a total return on this stock of 16%. The return occurred mainly because I got this stock very cheap in 2009. Probably just over 2% of my return is in dividends. I originally bought this stock as it was pointed out as a good one by Mike Higgs when he ran a website on dividend paying growth stocks. This stock is considered often with REITs, as it is a real estate company.

There is a minimum amount of insider buying (just less than $.5M). Insiders have more shares than stock options. Recently the insider’s that received options seem to be retaining them and this is a good sign. The company has recently raised their dividend by a third. This shows managements faith in future earnings and cash flows to cover the increased dividend. Also, the Melton family owns just over half of this company. Also, Melcor has also been buying back shares and they have been reduced by just over 1% per year of the outstanding shares over the past 3 years.

When I look at the 5 year median Price/Earnings Ratios, I get a low P/E of 6.3 and a high P/E of 14.9. I also get an average of 9.2. So the current P/E Ratio of 10 is just over the average for this stock. However, a P/E ratio of 10 is a good one. I get a Graham Price of $20.70. This is some 22% higher than the current stock price of $16.15. The high median difference between the Graham Price and the stock price is 22%. So by this measure, the stock price is relatively high. However, buying a stock at a price less than the Graham Price is considered a good price.

I get a 10 year median Price/Book Value Ratio of 1.04 and a current P/B Ratio of 1.36 and also by this measure, the stock price is relatively high. However, a P/B Ratio of 1.36 is a good ratio. I get a 5 year median yield of 2.78% and a current yield of 2.48%. This also does not show a current good stock price. However, the 10 year median low yield is just 2.2%, so the yield is better than it has sometime been.

The next thing to look at is the analysts’ recommendations. There seems to be two analysts following this stock and they both give a Buy recommendation. Melcor has just recently issued some convertible debentures of $40M. One analyst is impressed that KingSett Capital bought some $18M of these debentures. There are two articles on this issuance of debentures, one at Yahoo Finance and one at KingSett Capital’s site.

I plan to keep the shares I have in this company. I think that this has been a good investment for me.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as two golf courses. Its web site is here Melcor. See my spreadsheet at mrd.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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, April 26, 2011

Melcor Developments Inc

I first bought this stock (TSX-MRD) in July 2008 and some more in August 2008 and April 2009 and July 2009. I have made a total return on this stock of 16%. The return occurred mainly because I got this stock very cheap in 2009. Probably just over 2% of my return is in dividends.

This stock pays dividend twice each year. They decide each year how much to give in dividends and dividends have not only moved up, but has also moved down. The most recent move down was in 2009, when dividends were decreased by about 40%. They are prudent and this is a good quality to have in management for companies in which you invest. Even so, the 5 year and 10 year growth in dividends over the past 5 and 10 years is 18.5% and 17.5% per year, respectively.

The total return over the past 5 and 10 years has been 7.3% and 27.6% per year respectively. The part of this total return that would be dividends is 2.7% and 5% per year, respectively. As you can see, this company has done very well over the past 10 year, but not so well over the past 5 years. However, this 5 year performance is probably better than the market as a whole. The TSX index growth was just 3.6% per year, over the past 5 years.

For this company, most of the 10 year growth figures are better than the 5 year figures. For example, revenue per shares over the past 5 and 10 years has grown at the rate of 4% and 12.3% per year, respectively. The growth in earnings has grown over the past 5 and 10 years at the rate of 1.9% and 15.6% per year, respectively. The place where this is not true is the growth in book value, which for the last 5 and 10 years has been quite consistent. The 5 and 10 year growth is around 14.5% per year.

For this company, the Return on Equity at the end of 2010 is 12.6% and the ROE has a 5 year median value of 13.2%. With the introduction of the new IFRS accounting rules, it has been suggested that we also look at the ROE using the Comprehensive Income for a company. For this company, these values are not significantly different at 12.4% for the end 2010 and a 5 year median value of 13.8%.

Although this stock constitutes a small part my portfolio, I have been pleased with the results I have received via my investment. I plan to hold on to what I have and might consider getting more when I can invest again.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as two golf courses. Its web site is here Melcor. See my spreadsheet at mrd.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 for stocks followed and investment notes. Follow me on twitter.

Thursday, April 21, 2011

Enbridge Inc 2

I first bought this stock (TSX-ENB) in Jul 2005 and then some more in November 2008 and in January 2009. To date I have made a total return of 16.5% per year. Probably, the dividend portion is around 2.6 to 2.7% per year.

When I look at insider trading, I find Insider Selling at $49.9M. The selling seems to be all stock options, including $22M by the CEO. Everyone, except Directors have lots more stock options than shares. Even for the directors, their stock options are just below the number of shares they own. There is a bit of insider buying, but it is too minor to mention. The management has shown confidence in this company by increasing the dividend for this year by 15.3%.

I get 5 year median low Price/Earning Ratio of 17.7 and a 5 year median high P/E Ratio of 21. So the current P/E ratio of 20.7 is quite close to, but below the 5 year median high. I get a Graham Price of $35.26 and the current stock price of $59.38 is some 68% higher. The 10 year median difference between the Graham Price and the stock price is 38%. So on a relative basis, the stock price is high.

I get a 10 year median Price/Book Value Ratio of 2.69 and a current P/B Ratio of 3.07. The current P/B Ratio is some 14% higher than the 10 year median P/B Ratio. This would also point to a relatively high stock price.
I get a current dividend yield of 3.3% and a 5year median average yield of 3.3%. So this show the stock price is about average.

Another site to get ratios to compare to my spreadsheets would be Reuters. This stock would be at Enbridge. See the summary and financial tabs for applicable ratios. What is interesting is with the financial tab you not only get the ratios for this company, but the average in the particular sector, industry and S&P500. Although this seems orientated towards US stocks, it is still a useful comparison. By the way, TTM means trailing twelve months and MRQ means most recent quarter.

When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy recommendation. (See my site for information on analyst ratings.)

Analysts with Hold recommendations give a 12 month target for the stock price between $59 and $61. A couple of analysts with hold recommendations thought any price above $57 was too high to pay for this stock. Analysts with Buy recommendations talk about the good dividends and long term capital gains that can be made on this stock. A number of analysts mention that it is a well managed company and that it should be a core holding in any Canadian portfolio.

I am pleased with my investment in this company and will be keeping the stock I currently hold as a core part of my portfolio.

A number of other bloggers have mentioned this stock lately. First, My Own Advisor Blog mentioned Enbridge on April 18th. The Loonie Bin Blogger wrote about Enbridge on February 26, 2011. The passive Income Earner wrote about Enbridge on February 11th, 2011. Also, The Best Green Stocks blogger lists Enbridge as a clean energy stock on April 5th 2011.

On Tuesday, after the holidays, I will be talking about Melcor Developments Inc (TSX-MRD).

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.

Wednesday, April 20, 2011

Enbridge Inc

I first bought this stock (TSX-ENB) in Jul 2005 and then some more in November 2008 and in January 2009. To date I have made a total return of 16.5% per year. Probably, the dividend portion is around 2.6 to 2.7% per year. They on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).

This company has consistently raised their dividend since 1995 that I know of. Both the 5 and 10 year growth in dividends has been good at 10.4% each year. On my original investment in 2005, I am earning a yield of 5.5% and overall, I am earning on my investment in this company a yield of 5%. They have just raised the dividend this year by 15.3%. The Payout rates are good at with a 5 year median payout on earnings of 63% and a 5 year median payout on cash flow of 33%.

All the growth rates for revenue, earnings, total return, cash flow and book value are good for this company with the exception of earnings over the last 10 years and that is a little low, but still fine. The 5 and 10 year EPS growth is 9.5% and 7.5% per year, respectively. For the other growth rates, for example, on revenues per share over the 5 and 10 years is 10% and 17% per year, respectively.

As far as debt ratios go, the Liquidity Ratios and the Asset/Liability Ratios are a bit low and the Leverage and Debt/Equity Ratios a bit high. The Liquidity Ratio is 1.12 and the Asset/Liability Ratio is 1.38. The leverage Ratio is 4.05 and the Debt/Equity Ratio 2.94. However, pipelines companies do tend to have high debt loads.

The last thing to look at is the Return on Equity. The ROE is good at 12.9% for the financial year ending in December 2010. The 5 year median ROE is also good at 13.7%. The ROE is usually higher than the current 12.9% rate.

Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say about this stock. For me, I believe that my investment in this stock has been a good investment.

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, April 19, 2011

BCE Inc 2

I first bought BCE (TSX-BCE) in 1982. I have only tracked this stock on Quicken from 1987 and since then I have had a return of 12.7% per year in total returns. This total return figure includes Nortel and Bell Aliant, both of which BCE has spin off over the years. It is hard to value the return from this stock. Not only has BCE spin-off other stocks, but they tended to do this at high prices.

When I look at the Insider Trading report, I find that the CEO sold off $43.7M shares. A number of directors bought shares to the tune of $4M. There is net selling of $39.7M. The CEO seemed to be selling off his options. All insiders, except directors have more options that stock. The CEO, after his sell off of options in March now has more shares than options.

Insiders often look at options as part of their salary. Unfortunately, this sell off tells us nothing about what the CEO thinks of this company. I guess it points out what sort of money the CEO is making and it is a lot. The company has shown confidence in the earning ability of BCE by their recent dividend increase of just over 13%.

If you are interested in purchasing any stock I follow, you can, at any time look at the spreadsheet to compare historical values to current values. For this stock, you will find Price/Earning (both forward and trailing), and Price/Book Ratios at Yahoo Canada. You should look at Key Statistics tab. Or, you can go to Globe and Mail at G&M. The Globe and Mail summary will give you P/E (Trailing), Forward P/E and the yield.

For Price/Earnings Ratios, I get a 5 year median low of 9.69 and a 5 year median high of 12.62. You can compare this to the Forward P/E on Yahoo and today it is 11.45. As you can see, it is between these two rates. You can also look at my P/E ratio for an Average of the H/L prices and this has a 5 year median P/E of 11.15. So you can see that the current P/E ratio for this stock is between the high and low marks and is close to the average.

On sites that give you a Trailing P/E Ratio (or use last 10 months of earnings to determine the P/E Ratio, you should compare this to my Trailing P/E Ratio. This is always the 2nd P/E Ratio that I show. On Yahoo today you can get a Trailing P/E Ratio of 12.37. I get a 5 year median Low Trailing P/E Ratio of 12.95 and a 5 year median High Trailing P/E Ratio of 17.05. Here you can see that the current ratio is just below my Low Trailing P/E ratio. Do not forget that the Trailing P/E Ratio is based on actual earnings. The Forward P/E Ratio is based on expected earnings.

I haven’t found any site that gives you the difference between the Graham Price and the current Price. However, you can find the Graham price on my site and do the comparison yourself. In this case, I get a current Graham price $35.75, which is very close to the current stock price of $35.46. You can see from my spreadsheet that, on average, the stock price is 13.87% above the Graham Price. So, this stock being close to the Graham Price is good.

Next, look at the Price/Book Value Ratio. Yahoo has a P/B Ratio of 1.85. I have a 10 year median P/B Ratio of 1.95. You can see that the current one is lower than the 10 year median ratio, so this shows a relatively good stock price. A really good stock price would have a P/B Ratio at 80% lower than the 10 year median ratio. For BCE, the difference is that the current P/B Ratio is 96% of the 10 year median P/B Ratio.

If you look at dividend yield, you will see that G&M gives a current one 5.6%. On my spreadsheet, I give a 5 year median yield on the Average H/L price of 5.45%. This shows that the stock price is just better than average and therefore a good price.

The next thing I look at is Analysts Recommendations. I generally look at the Globe and Mail site at G&M, The Daily Buy and Sell Adviser’s Morning Call, and the Financial Post Report, which I get via my broker. These sites you a good idea what is being recommended. To get comments of analysts, you can go to Stock Chase online. I also look at various analysts reports I have. Stocks Reports are available at Advise for Investors. Go to the “Research Tab”. Where it says “Buy-Sell Research Report”, insert the stock symbol. The stock symbol for this stock is “BCE”. Reports are often available for $4.95.

When I look at Analysts Recommendations, I see Strong Buy, Buy and Hold. There is more Strong Buy than Buy recommendations. However, there are an awful lot of Hold recommendations. The consensus recommendations would be a Hold. (See my site for information on analyst ratings.)

Even though my spreadsheets shows a relatively good current price, analysts giving Hold recommendations give a 12 month stock price between $35 and $37.50. They are giving Hold recommendations, as they do not expect much movement in price over the next 12 months. The analysts with Buy recommendations give their reason because of the good dividend yield. They think you should buy this stock for the dividends.

A number of blogs have recently mentioned this stock. The Dividend Ninja mentions BCE as a good one to invest in on April 15, 2011 and Passive Income Earner has a blog entry on BCE, dated April 14, 2011 and Loonie Bin talks about buying BCE on December 10, 2010.

BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.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 for stocks followed and investment notes. Follow me on twitter.

Monday, April 18, 2011

BCE Inc

I first bought BCE (TSX-BCE) in 1982. I have only tracked this stock on Quicken from 1987 and since then I have had a return of 12.7% per year in total returns. This total return figure includes Nortel and Bell Aliant, both of which BCE has spin off over the years. It is hard to value the return from this stock. Not only has BCE spin-off other stocks, but they tended to do this at high prices.

I was lucky to sell half of my Nortel in 2000 when it was still worth something. And, looking Bell Aliant alone, I have lost 4.8% per year between the time of the spin-off in 2006 and when I sold the stock in 2008. I did not get much in the spin off and it was not a stock I wanted to hold. According to Quicken, I have made a total return of 8.6% per year over the past 5 years. This includes the Bell Aliant spin-off.

I guess the first thing to talk about is dividends. The yield on this stock is quite good at 5.6%. The growth in dividends has been over the past 5 and 10 years at 5.6% and 3.4% per year, respectively. However, BCE has been inconsistent in dividend increases. They have good increases when they do an increase, but there are lots of years with no increases, and some with decreases. The 10 year growth rate is not much better than the long term background inflation rate of 3%.

There has been limited growth in revenue over the past 5 and 10 years. Cash Flow growth is not much better. The growth in Earnings is better, with 5 and 10 year growth at 6.9% and 8.5% per year, respectively. Book Value growth over the past 5 and 10 years at 6.4% and 0% per year respectively is nothing to write home about.

When I look at the debt ratios, I find the Liquidity Ratio low at 0.60; however, it is usually low. The Asset/Liability Ratio is good 1.86. The Leverage Ratio at 2.72 and the Debt/Equity Ratio at 1.46 are pretty normal. There is nothing remarkable in these debt ratios for this company.

Looking at the Return on Equity, I find that the ROE for the financial year ending in 2010 at 15%. The 5 year median ROE is also 15%. Both these ROEs are good and the ROE for 2010 is also normal for this company.

I sometimes wonder if I should not sell the rest of my BCE shares. They are just under 1% of my portfolio and I have not been interested, when I have money to invest, in buying anymore. Problem, of course, is that my ACB is very low on this stock.

BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.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 for stocks followed and investment notes. Follow me on twitter.

Friday, April 15, 2011

IGM Financial Inc 2

I bought this stock (TSX-IGM) in 2006 and my total return to date is 5.4%. My dividend portion is probably around 4.4% and the rest is capital gain. This is a mutual fund company and mutual fund companies have not done well lately. The total return over the last 5 and 10 years for this company is around 4% and 10% per year. The dividend portion is probably around 4.5%.

When I look at Insider Trading, I find net Insider Selling of $3.4M. There is a minimal amount insider buying. As far as I can see, all insider but directors have lots more stock options than shares. There are lots of insider who are not executives or officers of the company that have stock options. IGM is also buying back stocks on the open market for cancellation. Over the past few years, the number of shares outstanding has gone down, but only by less than 1% per year.

I get a 5 year median low Price/Earnings Ratio of 13.3 and a 5 year high P/E Ratio of 17.4. The current P/E ratio of 15.4 is pretty close to an average. I get a Graham Price of $34.63 and a current stock price of $49.18. The stock price is some 42% higher than the Graham Price. This is pretty average for this company. This is a growth company, and these companies seldom have a stock price at the Graham Price.

I get a 10 year median Price/Book Value Ratio of 2.97 and a current P/B Ratio of 2.95. The current ratio is 99% of the 10 year median. When I look at the yield, I get a current one of 4.2% and a 5 year median at 5%. So by this measure, the price is higher than average, but there has been no dividend increase since 2009. By most of these measures, except yield, shows an rather average price.

When I look at analysts’ recommendations, I see Strong Buy, Buy, Underperform and Sell. There are at least 2 sells, but only 1 Underperform recommendation. There are more Strong Buy recommendations than any other recommendation. The consensus is a Buy. (See my site for information on analyst ratings.)

It is interesting that I find no Hold recommendations. One analyst’s said the stock was attractively priced. The 12 month stock price is at just $50.75 for those analysts that rate this stock a buy. (That would be a 12 month total return of just over 7 %.) Another buy recommendation comes with a 12 month price of $53.00. This will give a total return close to 12%.

One analyst with a sell recommendation says that it is a sell because there is not much growth in this stock at present. A number of analysts remark that it is a very solid company. Do not forget that analysts give rating depending on their views of why you should or should not buy a company. As far as I can see, the price on this stock is relatively an average price. It is not a great price.

As I said yesterday, I will retain the shares I have but I will not be buying more as I also have an investment in Power Financial.

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. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

Thursday, April 14, 2011

IGM Financial Inc

I bought this stock (TSX-IGM) in 2006 and my total return to date is 5.4%. My dividend portion is probably around 4.4% and the rest is capital gain. As you can see, I have not made much in capital gain. This is a mutual fund company and mutual fund companies have not done well lately. The total return over the last 5 and 10 years for this company is around 4% and 10% per year. The dividend portion is probably around 4.5%. Long term holders have done much better than those holding this stock for a shorter period have.

This stock is no longer on the dividend lists that I follow. In fact, these lists have gotten much shorter lately because so many companies stopped increasing their dividends since our last stock market crisis. However, this company does have a good record of increases and the dividend growth over the past 5 and 10 years is at 9% and 13% per year. I expect that this company will again start increasing their dividends.

However, they have not stated when this would happen as far as I can see. If they make the expected earnings and cash flow as given by analysts, the Payout Ratios should be good enough for the restarting of dividend increases. I must admit that analyst’s expected earnings and cash flows are not terribly accurate.

For this company, in general, the 10 year growth rates are better than the 5 year growth rates. For example, the 5 and 10 year growth for revenue is 2.2% and 8% per year, respectively. The 5 and 10 year growth for earnings is 1.5% and 7.5% per year, respectively. Cash flow has growth over the past 5 and 10 years at the rate of 5% and 7.7% per year, respectively.

The Liquidity Ratio at 2.95, with a 5 year median of 2.31 is very good. The Asset/Liability Ratio at 2.01 and with a 5 year median of 2.05 is also very good. The Leverage Ratio and the Debt/Equity Ratios are also good with the Leverage Ratio at 2.06 and the Debt/Equity Ratio at 1.02.

The Return on Equity using the net income is good for this company at 16.8%, with a 5 year median at 17.7%. The ROE using the Comprehensive Income is not much different, with a value of 16.8 for the year ending in December 2010. With the change in account rules to IFRS account in Canada, it is expected that analysts should start looking at ROE based on Comprehensive Income. I have added this to my spreadsheets.

I think that this has been a good investment for me. I will not be buying more as I also have an investment in Power Financial. I expect that this company will recover in time, as will all our insurance companies.

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. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

Wednesday, April 13, 2011

State of My Dividends, Q1 2011 2

Yesterday, I updated my spreadsheet on dividends. For all my stocks, I have shown in the “11” (for 2011) column, if a company has actually increased their dividend yet for their current financial year ending in December 2011. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2011. I have also added columns of “Div” and “12” for two of my stocks that have financial years not ending in December 2011 and they are therefore into their 2012 financial year.

For the first quarter of 2011, I had 10 companies increase their dividends. The last 5 are shown below. I covered the first 5 yesterday.
Barclays Bank (NYSE-BCS).
CDN Tire (TSX-CTC);
TECSYS (TSX-TCS);
Thomson Reuters Corp (TSX-TRI);
Russel Metal (TSX-RUS);

The first stock to talk about today is Barclays Bank (NYSE-BCS). This is the only foreign stock I own and it is in my US Trading Account. This is a bank stock that had a lot of problems in our recent crisis. It stopped its dividend payments in the first part of 2009 and in the end gave me one quarterly dividend of $.066 US. However, in March of last year, it increased it dividend to $.090 US. On an annualized basis, this is an increase of 37.5%. This March, Barclay’s increased their dividends for the quarter to $.1625US or $.65US on an annul basis. This is an almost 89% increase in dividends. However, the dividend was at $2.64US in 2008, before this crisis. Dividends have along ways to go to fully recover. See the spreadsheet.

The next company is CDN Tire Corp (TSX.CTC.A). The current dividend increase is very good, coming in at almost 31%. However, this is after two years of no dividend increases. The 5 and 10 year growth for dividends for this company is 11% and 7.7% per year. The yield on this stock is low with a current yield of 1.65 and a 5 year median yield is just 1%. After about 10 years of holding this stock, you can expect a return on your original investment around 4% per year. See the spreadsheet.

The next company is TECSYS (TSX-TCS). The current dividend increase is not bad at 9.1%%. It is really hard to say with this stock what sort of growth there will be in dividends. In 2010, the increase was 25%, but only 10% in 2011 and now it is 9.1%. This stock has a financial year end in April each year, so it is in the 2012 reporting year. This is a small cap dividend paying stock, so it is also a risky stock, but it is cheap at only $1.90 a share. See the spreadsheet.

The next company to talk about is Thomson Reuters Corp (TSX-TRI). This TSX company not only reports in US$, but pays its dividend in US$. I bought this stock in 1985. On my original investment in this stock, I am making a yield of 7.2%. The 5 year median dividend yield is ok at 2.8%, but recently it has been higher at 3%. For me, the dividend growth is around inflation. However, it is better in US$, where the 5 and 10 year growth rates are 4.7% and 5.5% per year. Part of the problem, of course, with any stock reporting and paying dividends in US$ is that the CDN$ has risen strongly over the past while. See the spreadsheet.

The last stock to talk about is Russel Metal (TSX-RUS). This company started dividend payments in 2000. In most years, it has increased its dividend, but in 2009, the dividends were decreased from $1.80 to $1.00. There was no increase in 2010 and the latest increase of 10%, gets the dividends back to $1.10. They had good reason to reduce the dividends in 2009, as they made no money in that year. Even considering the above, the dividend growth over the past 5 and 10 years has been at 7.4% and 20% per year. This company is considered to be a growth company, so it is riskier than a lot of dividend paying companies, but over the long term should do just fine. See the spreadsheet.

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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, April 12, 2011

State of My Dividends, Q1 2011

Today, I am updating my spreadsheet on dividends. For all my stocks, I have shown in the “11” (for 2011) column, if a company has actually increased their dividend yet for their current financial year ending in December 2011. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2011. I have also added columns of “Div” and “12” for two of my stocks that have financial years not ending in December 2011 and they are therefore into their 2012 financial year.

For the first quarter of 2011, I had 10 companies increase their dividends. The first 5 are as follows and I will talk about them today. I will cover the remaining 5 tomorrow.
Canadian National Railway (TSX-CNR);
Enbridge Inc (TSX.ENB);
Fortis Inc (TSX-FTS);
Metro Inc (TSX-MRU.A);
Richelieu Hardware Ltd (TSX-RCH);

The first stock to talk about is Canadian National Railway (TSX-CNR). This stock’s yield is not very high, and the 5 year median dividend is just 1.8%. Since the company usually increases their dividend at the beginning of each year, the increases do not affect the following year. Although this company has a 5 year dividend growth of just over 16.6%, the recent dividend increase was been higher at 20.4%. In good times, this company gives very good dividend increases. You could expect to see an 8% yield on a current investment in 10 years time. See the spreadsheet.

The next company is Enbridge Inc (TSX.ENB). The current dividend increase is very good, coming in at almost 15.3%. This is higher than the 5 year growth per year of 10.4% per year. The last two year’s increases were also healthy at 14.9% and 12.1%. The yield on this stock is also good as the 5 year median yield is 3.3%. After about 10 years of holding this stock, you can expect a return on your original investment around 8.5% per year. See the spreadsheet.

The next stock, Fortis Inc (TSX-FTS), is one of my favorites. This stock has been raising their dividends every year since 1973. That is, they have raised their dividend every year over the past 37 years. The dividends have grown at the rate of 14% per year over the last 5 years. This is because of high growth rates between 2006 and 2008, but these high growth rates may not appear again. Their 10 year growth rate is a lower at 8.7% per year. The dividend increase this year is just 3.6%, and since this is a utility stock, I think that the growth in dividends in the future might be lower than the 5 year rate and may even be lower than the 10 year growth rate. However, the current yield at 3.6% is good. The median yield over the past 5 year is good at 3%. See the spreadsheet.

The next stock to talk about is Metro Inc (TSX-MRU.A). This stock has just increased their dividend by over 13%. This is a good increase, although the yield on this stock is quite low. The yield is currently at 1.65%. For this stock, the 5 and 10 year yearly growth in the dividends has been at 11% and 16.1% per year. Also, the dividend growth rates are much higher than inflation, and if you live off dividends, this is a very good thing. However, since the yield is low, you would be getting a yield on a current investment of only 5% on a current investment after 10 years. See the spreadsheet.

Richelieu Hardware Ltd (TSX-RCH) is another of my stocks with a dividend increase in the first quarter of 2010. This stock has not been paying a dividend very long, as they just started in 2002. The stock’s dividend yields are low, with a 5 year median yield of just over 1.3%. The 5 and 10 year dividend increases are 12.5% and 16 % per year. These are very good increases. The current one is much higher at 22.2%. The dividends on this stock are a bit erratic as there was an 11% decrease in dividends in 2004 and in 2009, there was no increase. Dividend yield is low on this stock and is current at 1.4%. On an investment today, you could be getting a yield of 4.5% in 10 years time. See the spreadsheet.

For the first quarter of 2010, I had 7 companies increase their dividends. They were the first 6 on the above list, plus Alimentation Couche-Tard Inc. B (TSX-ATD.B). However, the ATD stock increased their dividend in March and December in 2010. So far this year, my dividends have increased by 6.4%.

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 for stocks followed and investment notes. Follow me on twitter.

Monday, April 11, 2011

TransAlta Corp 2

I bought this stock (TSX-TA) in 1987, some 24 years ago. I brought some more in 2009 because the price was good. I have made a total return of 7.8% per year on this stock. About 4.5% of my total return would be in dividends. This is a solid, conservative dividend paying utility stock that increases their dividend at the inflation rate and gives you a good dividend yield..

I cannot find any Insider Trading report on this stock. I do not know why this should be. There are a lot of institution owners of this stock and they own about 50% of this company. The stock price has been basically flat since early in 2009. There is a problem with TransCanada over the permanent shutdown of Units 1 and 2 of the Sundance Coal Fired power plant. This will probably end up in court.

No one thinks that the dividend is in jeopardy, and that the dividend will hold up the stock price until better times for this company. The dividend at the moment is quite attractive at 5.7%. This is higher than the 5 year median dividend yield of 4.1%.

I get a 5 year high median Price/Earnings Ratio of 28 and a 5 year low median P/E of 19.6. These ratios are rather high ones. The current P/E Ratio at 19.34 is at the lower end for this ratio. I get a Graham Price of $17.55 and the current stock price of $20.51 is some 17% higher. However, the stock price of this company has seldom been at or below the Graham Price. The average difference between the Graham Price and the stock price is 31%. The difference at the 5 year median low stock price is a Graham Price/Stock Price difference of 8%. So this difference today is in the low range.

I get a 10 year median Price/Book Value ratio of 1.80 and a current P/B Ratio of 1.59. So the current ratio is some 88% of the 10 year median ratio and points to a good relative stock price. In fact, all my spreadsheet indicators point to a relatively good current stock price. Where you see a problem is in the Dividend Payout Ratios and the one for Earnings shows that the company is currently paying out more in dividends that it is earning. The Dividend Payout Ratios for the last 2 years is 129% and 116%. This Dividend Payout Ratio for 2011 is expected to be around 109%.

When I look at analysts’ recommendations, I find Strong Buy, Hold, Underperform and Sell. I do not find any Buy recommendations. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) The reason analysts give for the Strong Buy is the dividend rate of 5.7%.

Most analysts give this a rating of Hold because they do not see any change in the stock price over the next 12 months. Their 12 months stock price is either $20 or $21. The current stock price is $20.51. Analysts that give Underperform and Sell recommendations say the same thing, that they see no stock movement over the next 12 months. No one sees any dividend increase over the next 12 months.

Since I own this stock, I will hold on to what I have. However, I do wonder about any buy recommendations, as I would think that there would be better utility stocks, with the promise of both capital gain and dividend income over the next year. I personally would not sell a stock just because it is going through a rough patch and that is why I will hold.

TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here Transalta. See my spreadsheet at ta.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 for stocks followed and investment notes. Follow me on twitter.

Friday, April 8, 2011

TransAlta Corp

I bought this stock (TSX-TA) in 1987, some 24 years ago. I brought some more in 2009 because the price was good. I have made a total return of 7.8% per year on this stock. About 4.5% of my total return would be in dividends. This is a solid, conservative dividend paying utility stock. What I expect it to earn over the long term is 8% per year with about 4% from dividends. I would want dividend growth to be at the rate of inflation.

However, this stock is going though a trying time and over the past 5 and 10 years, the total return would be probably around 0% and 4.5%. Basically, what I have earned is dividend income. On my original investment in 1987, I am making a yield of around 8%. The dividend growth over the past 5 and 10 years has been at 3% and 1.5% per year, respectively. The 10 year growth is lower than inflation.

The current yield at 5.7% is good. The dividend potential on an investment today would be 7.6% within 10 years time based on annual growth of 3%. Long term background inflation is 3%. The 10 year growth in inflation in Canada has been at 2%. The 5 year growth in inflation is a bit lower at 1.8%. Dividend payout Ratios are high, especially compared to earnings where they are more than 100%. Payout Ratio for Earnings was 116% and Payout Ratio for Cash Flow was 31% for 2010. There will probably not be an increase in dividend until the Payout Ratio for earnings is better.

The best growth rates have been for cash flow, which over the past 5 and 10 years has grown at the rate of 3.5% and 12% per year, respectively. Revenues, earnings, and book value have not grown at all or only minimally. As I have said, the company is going through a rough time.

This sort of company generally has high debts and some of the debt ratios are a little worse than they should be. The Liquidity ratio at 0.71 is low. The Asset/Liability is where it should be at 1.56. Both the Leverage Ratio and the Debt/Equity Ratios are a bit high at 3.50 and 2.25 at the end of 2010, respectively.

The Return on Equity, using the net income is a bit low for both 2009 and 2010. They were 6.2% and 7.7% respectively. The 5 year median ROE is 7.7%. I would like it a bit higher at 8%.

This stock is one of my core stocks and I will retain the shares I have for the dividend yield and some future capital gain. This company is moving away from coal fired electrical generation facilities and it has made deals with applicable governments for an orderly transition to cleaner forms of electrical generation.

TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here Transalta. See my spreadsheet at ta.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 for stocks followed and investment notes. Follow me on twitter.

Thursday, April 7, 2011

AltaGas Ltd 2

I bought this stock (TSX-ALA) in 2009 and some more in 2010. Since I bought this stock at a very good price, I have made a total return of 38% per year. Probably about 10% of this return is in dividend or distributed income.

The Insider Trading report only covers this company since the conversion of the company to a corporation, which is from July 2010 and is not for a full year. According to the Insider Trading report, there has been almost $2M of insider buying, the majority ($1.7M) by the company’s CEO. There has been insider selling of $.5M for a net insider buying of $1.4M. This is a good sign that CEO is buying into the company. He now owns 1.5% of the company. The company has also said that they plan to grow dividends in the future and this is another good sign.

I get a 5 year median low Price/Earnings Ratio of 10.4 and a 5 year median high P/E of 15.13. Because this company’s earnings are expected to drop in 2011, I get a current P/E ratio of 26. The trailing P/E ratio is lower at 21.9. Both these are high. The current one of 26 is not only high relatively, but in absolute terms.

I get a current Graham Price of $18.17. The current stock price of $26.06 is some 43% higher. The 10 year median difference between the Graham Price and the stock price is 30%. So by this standard the current stock price is high.

I get a 10 year median Price/Book Value Ratio of 1.70 and a current one of 1.78. The current one is only 4% higher than the 10 year median P/B Ratio. The current dividend yield is 5.1% and the 5 year median is 9%. However, this is not a fair comparison because the dividends have been recently reduced.

When I looked for analysts’ ratings, I find Strong Buy, Buy, Hold, Underperform and Sell. In other words, the recommendations on this stock are all over the place. The consensus recommendation would a Hold. There is not that many analysts following this stock, but most recommendations are a Buy and Hold. One analyst that recently changed to a Hold said that the stock has reached his 12 month stock price. I find 12 months stock prices at $25 and $26. Another analyst said that the company is fairly well hedged so that gas prices neither help nor hurt them.

The sell analyst did not like the fact that dividends were cut. However, since the company is no longer an Income Trust, they have to bring the distributions down to a manageable portion of the earnings and cash flow. The company can do longer base their distributions on Funds from Operations as Income Trust companies did. This is not the only Income Trust to cut distributions on the change to a corporation and it is a logical response to a change to a corporation. The company plans in the future to start increasing their dividends. However, they have not said when this will happen.

I plant to keep my investment in this company. I realize that on a go forward basis, I will not earning what I have in the past, but I expect a reasonable rate of return. A reasonable rate of return for a dividend paying company is 4% capital gain and 4% dividend income.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here Altagas. See my spreadsheet at ala.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 for stocks followed and investment notes. Follow me on twitter.

Wednesday, April 6, 2011

AltaGas Ltd

I bought this stock (TSX-ALA) in 2009 and some more in 2010. Since I bought this stock at a very good price, I have made a total return of 38% per year. Probably about 10% of this return is in dividend or distributed income. I wanted to get some gas stock as I feel that we did to get off oil and the most practical way, at the moment, to do this is by switching from oil to gas. It is hard to know when solar power will be practical and wind power may never be practical.

When I bought this stock, it was an income trust. It changed to a corporation in July 2010. At that time, it dropped its dividend by just under 40%. The dividend/income yield dropped from 11.2% to 6.1%. As an income trust, the income was mostly a mixture of Return of Capital and Interest Income. AltaGas’s future distributions will now be in the form of dividends.

The current yield of 5.1% is still a very good yield. However, since the company is now a corporation, they will have to get their payout ratios re earnings and cash flow down before increasing dividends. But the company has said that they do plan to grow their dividends in the future.

When I look at total return on this stock over the past 5 and 10 years, the 5 year figures are really low. I did better because I bought the stock at a low point. The total return over the past 5 and 10 years is 3% per year and 25% per year, respectively. The income portion of this return is 8% per and 10% per year, respectively. The capital gain was -5% and 15% per year, respectively.

Growth in revenue, earnings and cash flow has not been good over the past 5 years. However, the 10 year growth figures are generally good. This company issues shares via a DRIP plan, so the number of shares outstanding is increasing. Shares have been increasing on average at the rate of 8% per year. Revenues have grown over the past 5 and 10 years by -2% and 10% per year, respectively. However, revenue per share has grown by -9% and -2% per year, respectively.

The cash flow has grown over the past 5 and 10 years, by 0% and 8.2% per year, respectively. The best growth is in book value, where the 5 and 10 year growth was 10.8% and 8.5% per year, respectively. The return on Equity is fine for 2010 at 8.4% with a better 5 year running average of 14.5%.

The Liquidity Ratio is a bit low at 0.94. The 5 year median is just 0.92. However, last year ratio was really low and the ratio generally hovers around 1.00. The Asset/Liability Ratio has been much better at 1.79 at the end of 2010 and a 5 year average of 1.83. The Leverage Ratio and the Debt/Equity Ratios are ok, with the Leverage Ratio at 2.27 and the Debt/Equity Ratio at 1.27 at the end of 2010.

I am pleased with my investment and plan to continue to hold on to this stock. I knew when I bought this stock about the plan to lower the income yield. However, I felt the company was a worthwhile investment. I will not be buying any more as I have enough.

The Dividend Ninja has an interesting blog today on High Yield Canadian Stocks.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here Altagas. See my spreadsheet at ala.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 for stocks followed and investment notes. Follow me on twitter.

Tuesday, April 5, 2011

Richelieu Hardware Ltd 3

I first bought this stock (TSX-RCH) in 2007 and then some more in 2009. I have made a total return to date of 23% per year (sorry yesterday I mistakenly said 2.3%) with about 1.2% attributable to dividend income. On this stock, the current dividend yield is 1.4% and it has a 5 year median yield of 1.35%. The dividends are low, but the dividend increases are good. The 5 and 10 year growth rate for dividends is 12.5% and 16% per year, respectively. The increase for 2011 was 22%.

In looking at the Insider Trading report, I find a minimum amount of insider buying and insider selling. I also find that only the CFO and Officers' of the company have more stock options than shares. Both the CEO and directors have more shares than stock options. In fact, the CEO owns almost 7% of this company.

I get 5 year median low Price/Earnings Ratio of 12.3 and a 5 year median high P/E Earnings of 17. I have a current P/E ratio of 15.6. Also, I get a 5 year median low Trailing P/E Ratio of 13.6 and a 5 year median high Trailing P/E of 18.7. I get a current Trailing P/E 17. When you look at sites that give you a P/E based on last years earnings, you need to compare the P/E ratio to trailing P/E ratios.

The current P/E ratio of is a little higher than the average 5 year median P/E ratio of 14.7 and the Trailing P/E ratios is a little lower than the average 5 year median P/E of 17.2. The Trailing P/E ratios are based on last year actual earnings. My current P/E ratio is based on earnings estimates for 2011.

I get a current Graham Price of $23.12 and the current stock price of $30.85 is some 33% higher. The 10 year median difference between the Graham Price and the stock price is 41%. So by this measure, the stock price is relatively closer to the Graham Price than usual. There has been few times when the stock price of this stock has been at or below the Graham Price. This is because the stock is a growth stock.

I get a current Price/Book Value Ratio of 2.57 and a 10 year median P/B Ratio of 2.86. The P/B ratio is only 90% of the 10 year median P/B ratio and this tends to point to a good current stock price. I get a current dividend yield of 1.43% and a 5 year median yield of 1.35%. These are close, but the current one is a bit better. The yield for this stock is rather low. The 10 year growth potential of this dividend is 5.5% based on yearly growth of 14.5%. So, if you bought this stock today, in 10 years time you could be earning 5.5% on your current investment.

When I look at analysts’ recommendations, I find Buy and Hold recommendations. The consensus would be a Hold recommendation. (See my site for information on analyst ratings.) One analyst said he is giving this a hold because the stock price has been moving up so much lately. Other analyst’s mention it virtually debt-free status. A 12 month stock price is given between $31 and $33 for those giving this stock a hold rating.

I bought this stock for both capital gains and increasing dividend income. I am pleased with my purchase and will keep this stock.

Another blog talks about his dividend increases at Frog of Finance.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. This stock is widely held, but QV Investors hold about 10% of outstanding shares. They are Institutional Investors looking after Mutual Funds, Pension Funds and Foundation Funds. Its web site is here Richelieu. See my spreadsheet at rch.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 for stocks followed and investment notes. Follow me on twitter.

Monday, April 4, 2011

Richelieu Hardware Ltd 2

I first bought this stock (TSX-RCH) in 2007 and then some more in 2009. I have made a total return to date of 23% per year (sorry yesterday I mistakenly said 2.3%) with about 1.2% attributable to dividend income. On this stock, the current dividend yield is 1.4% and it has a 5 year median yield of 1.35%. The dividends are low, but the dividend increases are good. The 5 and 10 year growth rate for dividends is 12.5% and 16% per year, respectively. The increase for 2011 was 22%.

I want to make a couple of more points on dividends before I continue with this stock. First, when buying a stock like Richelieu, I realize that I am sacrificing current yield for future increases in dividend. The other thing is that when looking at Dividend potential you should consider inflation, with background inflation running at 3%, but current inflation running at 1.8% over the past 5 years.

Stock prices do not drive dividends, but payout ratios for dividends do drive stock prices. That is the company must be earning more money or cash flow for dividends payments to increase. Dividend increases can drive stock prices to some decree. Also, dividend can have a stabilizing effect on stock prices.

For this stock, 10 year growth figures are better than the 5 year ones. For example, the revenue per share growth rates for the last 5 and 10 years are 7% and 9% per year, respectively. The cash flow growth rates for the last 5 and 10 years are 9% and 12% per year, respectively. Earnings per shares have grown over the last 5 and 10 years at the rate of 8.8% and 13% per year respectively. So this stock has done well.

The debt ratios on this company are very good. Maybe it is because the CEO owns almost 7% of this company. In any event, the Liquidity Ratio is 3.71 and the Asset/Liability Ratio is 4.79. For this ratio, anything over 1.50 is good. The Leverage Ratio is 1.26 and the Debt/Equity Ratio is 0.26. For these last two ratios lower is better and these are rather low ratios.

I guess the last thing is the Return on Equity. The ROE for the 2010 was 20.6% and the 5 year running average is 17.3%. Because of the shift to IFRS (International Financial reporting Standards) accounting, it has been suggested we should also look at ROE using the new comprehensive income. For this type of ROE, I get 15% for 2010 and a 5 year median value of 15%. I do not have any experience with this, so it is hard to judge this value yet.

I am pleased with my investment in this company. Tomorrow, I will look to see what my spreadsheet says about the current price and also what the analysts are saying.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. This stock is widely held, but QV Investors hold about 10% of outstanding shares. They are Institutional Investors looking after Mutual Funds, Pension Funds and Foundation Funds. Its web site is here Richelieu. See my spreadsheet at rch.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 for stocks followed and investment notes. Follow me on twitter.

Friday, April 1, 2011

Richelieu Hardware Ltd

I first bought this stock (TSX-RCH) in 2007 and then some more in 2009. I have made a total return to date of 23% per year with about 1.2% attributable to dividend income. On this stock, the current dividend yield is 1.4% and it has a 5 year median yield of 1.35%. The dividends are low, but the dividend increases are good. The 5 and 10 year growth rate for dividends is 12.5% and 16% per year, respectively. The increase for 2011 was 22%.

The way I invest to have an income is have stocks with varying yields and varying rates of dividend increases. There is a tendency for stock with low yields to have high dividend increases and those with high yields to have low dividend increases. So I look not only at current yield, but also at the dividend growth rate when deciding on what stocks to have.

With this stock, I get a low yield and a high growth in dividends. Often utilities, like TransCanada (TSX-TRP) give you a better yield (current at 4.3%) and a lower growth rate (5 year growth at 5% per year). REITs also usually have good dividend yields and low increases. Stocks like RioCan (TSX-REI.UN) have a current yield of 5.8%, a 5 year median yield of 6.7% and a 5 year growth rate of just 1.6% per year. Currently the growth in this stock is below inflation, but it is usually, just above inflation.

What I aim for is a portfolio yield of 4% and growth of 10% in income. My 5 year median yield is 3%, but my 5 year median growth in dividends was 15%. My 5 year medina growth in income is 13%. (I do have cash (about 5 % of my portfolio) because I need to withdrawal money from my RRSP each year.) I do have a tendency to pick stocks with lower yields but higher growths. Since I am living off my dividends, the most important thing is to limit my withdrawals to my dividends. My 5 year average withdrawal is 3%, which is the same as my 5 year median yield. But averages do not show the whole picture. I have actually taken out less money than I have earned in income.

I am also looking for an 8% portfolio return with a 4% withdrawal rate. This is considered to be a prudent plan for people living off a portfolio. It also allows you to increase your withdrawals by around 4% per year. I have a 5 year average return of 8.3% and a 5 year withdrawal rate of 3%. Since I stopped working in 1999, I have been through two bear markets. During these bear markets my portfolio value crashed like everyone else’s. However, my dividend income did not crash.

No matter how you view the idea of dividend growth, I find that it is sure nice to have a stock from which you earn an increasing income each year. I always go for stocks with dividend growth. However, to view discussions on this subject, see the paragraph below.

I must admit that I do look at yield on cost that is current dividend yield compared to my original cost of buying the stock. This is also called Dividend Growth Potential. But, I do not confuse this with compounded rates of return. To see Canadian Couch Potato’s rant on this. But also see Dividend Growth Investors blog on Dividend Growth Potential. Charles Carlson talks about Dividend Growth potential in his book called “The Little Book on Big Dividends. His website is at Big Save Dividends. There is also a discussion this subject at Value Line.

On Monday, I will continue to review this particular stock.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. This stock is widely held, but QV Investors hold about 10% of outstanding shares. They are Institutional Investors looking after Mutual Funds, Pension Funds and Foundation Funds. Its web site is here Richelieu. See my spreadsheet at rch.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 for stocks followed and investment notes. Follow me on twitter.