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.

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