CCL Industries Inc

When I bought Life Insurance, I bought a plain vanilla participating Whole Life Policy. Today, I received a dividend cheque. Dividends that are generated above the premium due is paid to me in cash. I bought it in 1985 and I have paid no premiums since 2004.

Why did I buy Whole Life? I wanted to buy Life Insurance, not a mutual fund (i.e. Universal Life). I wanted to buy insurance where the company assumes the risk (and not me, as in Universal Life).

Now, on to the stock, CCL Industries (TSX-CCL.B) that I want to discuss today. First of all, I do not own this stock. This is also an Industrial Stock, but this company is into packaging for consumer products. They have done better than Canam since the recent recession, but they have not completely recovered.

The dividend yield is currently at 2.36% which is rather high for this stock. This is because they have continued to raise their dividends each year. This stock has a very good record of increasing dividends. They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). The 5 and 10 year growth in dividends is 9.8% and 7.2% respectively. So it has a decent dividend (usually around 2%) with decent increases.

The Dividend Payout Ratios for this stock are still quite good. The DPR are expected to be 28% for earnings and 13% for cash flow. The 5 year median ratios are 30% for earnings and 10% for cash flow. (See my site for information on Dividend Payout Ratios). Dividend Payout Ratios tend to be lower for Industrial companies as they need money for investing.

Growth for this company is rather a mixed bag. Revenue really hasn’t been growing. This is not particularly good. Revenue going forward is only expected to grow in the 4 to 5% range this year and next. Cash Flow is only growing modestly at 3.9% and 2.5% per year for the past 5 and 10 years. Earnings growth over the past 10 years is good at 12% per year, but growth over the past 5 years is basically 0%. Growth in Book Value is modest at 3.4% and 4.2% per year over the past 5 and 10 years, respectively.

If you had invested in the company over the past 5 or 10 years, you would have made around 5.5% and 14% per year, respectively. The dividend portion of this return would have been 2.7% and 2% per year, respectively.

The Return on Equity lately is fine. The ROE for the end of financial year of 2010 is 9%, with a 5 year median of 9% also. The ROE for the last 12 months to the end of September 2011 is a bit better at 9.6%.

The current debt ratios are good. The current Liquidity Ratio is good at 1.58. Although the 5 year median Liquidity Ratio is a bit low at 1.47 (I prefer one at 1.50 and above.) The current Asset/Liability Ratio is good at 2.01 and has always been good with a 5 year median of 1.84. The Leverage and Debt/Equity Ratios are good at 1.99 and 0.99 respectively.

This would be a company a dividend investor might buy to diversify their portfolio into industrials. It is riskier than utility and financial companies, but no riskier than consumer stock.

CCL Industries Inc. provides state-of-the-art specialty packaging solutions to some of the world’s largest producers of consumer brands in personal care, cosmetic, healthcare, household and specialty food and beverage products. With headquarters in Toronto, Ontario, Canada, CCL Industries operates production facilities in North America, Europe, Latin America, Asia and Australia. Stuart Lang and Donald Lang own this stock 94%. Its web site is here CCL. See my spreadsheet at ccl.htm.

Today, I bought a few hundred shares in Canam Group Inc. (TSX-CAM) because it was quite oversold and I had a bit of extra money in the Lock-In RRSP account.

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.