Wednesday, June 22, 2011

Thomson Reuters Corp

I own this stock (TSX-TRI, NYSE-TRI). I held this stock in my RRSP account between 1998 and 2000. In this account, I made a total return of 14.3% per year. For this period, my dividend portion of the total return was probably 2.2%. For my Trading account, I bought this stock in 1985 and I still have this stock in this account. To date, I have made total returns of 7.45% per year. Approximately 3.5% of this total return is in dividends.

I have often held the same stock in the trading account and RRSP accounts. When I go looking for something to buy, I look at what I already have to see if any would be a suitable buy. If I want to sell a stock or some of my shares in a company, I would first sell off stock in my RRSP account before my trading account.

This stock reports in US$. Needless to say, the stock has done better in US$ than in CDN$, especially of late. In respect to dividends, it is no exception. Dividends have only gone up in US$, which is the currency dividends are proclaimed in. In CDN$ terms, dividends have not always gone up. Also, the 5 and 10 year growth in dividends are a lot less in CDN$ then in US$.

For example, between 2009 and 2010, dividends increased in US$ by 3.6% and decreased in CDN$ by 6.2%. My spreadsheet shows that actual dividends I received per shares. (This is different from most CDN$ values on my spreadsheet, where I have used the year end currency exchange rate.)

The growth in Dividends in CND$ over the past 5 and 10 years is 4.3% and 1.4% per year. The growth in Dividends in US$ over the past 5 and 10 years is 8% and 5.4% per year. However, this is quite common for Canadian stocks that reports in US$ over the past while because our Canadian currency has basically been increasing against the US currency since 2003. This company reports in US$; as they do most of their business in US$ currency.

As with most American stock, this stock got slammed with the last recession and then got slammed with the current one and has not really recovered. In US$ terms, over the past 5 and 10 years, this stock has had a total return of 4.4% and 2.9%. In CDN$, this stock has basically broken even. Well, it could be worse. A lot of stocks have declined in total returns over the past 5 and 10 years.

The Dividend Payout Ratio for earnings has been over 100% over the past two years. It is expected to be below 60% and therefore much more reasonable this year. The Dividend Payout Ratio for Cash Flow has remained below 40% and therefore not a concern.

There has been a bit of growth in Revenue in US$ terms over the past 5 and 10 years, but not in CDN$ terms. There has been a bit of growth also in Book Value over the past 5 and 10 years. There has basically been no growth in Earnings or Cash Flow over the past 5 and 10 years, no matter what currency you look at. On the other hand, Return on Equity has not been bad, especially of late. The 5 year median ROE is 10.7% and the ROE for the financial year ending December 31, 2011 was 19.3%. The last two year’s ROE was 7% and 4.5%, respectively.

The debt ratios are fine, except for the Liquidity Ratio. The Liquidity Ratio is currently at 0.78. This means that the current assets cannot cover the current liabilities. Adding in Cash Flow helps a bit. The other ratios are fine. The Asset/Liability Ratio is currently at 2.28 and this is very good. The Leverage Ratio and the Debt/Equity Ratio are both fine. They are currently at 1.81 and 0.79 respectively.

I expect that this stock will go back to a total return of 8% per year. For this type of company, this is what would be expected for the long term. Currently, I will be keeping my shares, but they are only just over 1% of my portfolio.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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.


  1. Susan,

    Why would you sell a stock from your RRSP account before your trading account? Sorry to ask the question but I guess I am not very bright. Thanks.


  2. Yeah, I had the same question as anonymous Susan.

    Also, do you see any currency risk given this stock and a couple other Canadian stocks pay dividends in USD?

    I guess my take is, if you diversify your stock holdings enough a) it really doesn't matter and b) as long as you are a true buy-and-holder, you hold stocks plenty long enough, short-term currency risk doesn't matter either.


    BTW - I responded to your recent comment about my Larry Swedroe post on my blog.