Thursday, May 31, 2012

Ensign Energy Services 2

I do now own this stock (TSX-ESI) as I scraped some money together and got 100 shares. I got this stock from a dividend list that I follow of Dividend Aristocrats (see indices).

Over the past year there has been little insider trading with very minimal insider buying and insider selling. Over the past 4 months, insiders have been retaining their options and this is positive. There are a number of insiders who own millions of dollars in these shares and have maintained or marginally increased their ownership over the past year. One officer owns or controls some $338M in shares at today’s prices.

Yes, they there seems to be a lot of outstanding options. The company also has Rights Deferred Share Units outstanding. Institutions have been behaving differently as they have decreased their ownership in this company by 5% over the past 3 months. There are some 78 institutions that own about 33% of the outstanding shares. (Insiders have marginally increased their ownership over the past 3 months by buying shares under the company plan or retaining options.)

The 5 year median low and high Price/Earnings Ratios are 9.13 and 15.55. The current P/E Ratio is just 8.01. (Note that the 10 year low P/E Ratio is higher than the 5 year one at 10.96.) The test shows a cheap stock price.

I get a Graham Price of $20.96. The current Stock price of $13.30 is some 37% lower than the Graham Price. The 10 year low difference between the Graham Price and Stock price is the Stock price being 12.5% lower. The 10 year median and high difference between the Graham price and the Stock price is the stock price being 11.6% and 38% higher than the Graham Price. This test shows a cheap stock price.

The 10 year median Price/Book Value Ratio is 2.20 and the current P/B Ratio is 1.13. The current Ratio is just 51% of the 10 year median ratio. This test shows a cheap stock price.

The current dividend of 3.16% is some 37% higher than the 5 year median of 2.3%. (The 10 year median dividend yield is even lower at 1.15%). This test shows a cheap stock price.

When I look at analysts’ recommendations I get Strong Buy, Buy and Hold. The overwhelming majority is Hold and the consensus recommendation is a Hold. One analyst says that the first quarterly revenue hit the highest quarterly level ever for this company. However, he has a Hold on this stock because of market uncertainty revolving around rigs moves. He also felt that estimates for 2013 should be moved down because of market uncertainty.

One analysts with a buy said the fundamentals of the company is pretty good. Another thought the whole sector has declined. There is a current article in the G&M that says “For the patient investor, a sector packed with value”, which talks mostly about this industry. The article quotes two analysts with Buy recommendations on this stock. See G&M article. Another analyst recently downgraded this stock from Buy to Hold as he felt its shares are no longer undervalued relative to peers. However, he also said that Ensign remains one of the more defensive stock for North American contract drillers.

Over the last 90 days, estimates have been trending down with EPS for 2012 decreased from $1.80 to $1.66 and 12 months stock price from $20.40 to $18.60. Still, the 12 month consensus stock price at $18.60 implies a total return of 43%. Personally, I can see why prices are trending downward. European debt problems are affecting everyone and there is no present solution for the problems. (Or, really there are no solutions that people are willing to do.)

To me, the positives are the relatively high dividend and the fact that the company recently increased the dividend by 10.5%. I like to buy when companies are relatively cheap. It is also great to buy in a market going down.

I also bought 200 shares of Automodular Corp (TSX-AM) with dividend income from my TFSA. This is a small cap I originally bought to invest bits of money held in my TFSA. See my most recent report on this company and see my spreadsheet at am.htm.

Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally. They are one of the world's leading land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Its web site is here Ensign. See my spreadsheet at esi.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, May 30, 2012

Ensign Energy Services

What we did wrong in the good times. See comments blog.

I do not own this stock of Ensign Energy Services (TSX-ESI), but maybe I should. This stock is on the dividend list I follow of Dividend Aristocrats (see indices). This is a great list to go to, to find stocks to investigate for possible investments.

This stock has been paying dividends since 1995 and has increased their dividends every year since then. The dividend growth over the past 5 and 10 years is 6.9% and 14.8% per year. Dividend increases have slowed since the recent crisis, but the most recent one at the end of 2011 was for 10.5%, so it would seem that management is expecting better earnings ahead. The analysts following this stock seem to concur on this.

The Dividend Payout Ratios are low on this stock with 5 year median DPRs of 28% and 16% for earnings and cash flow respectively. However, the 10 year median DPRs are even lower at 20% and 16% for earnings and cash flow. The DPRs hit a high in 2010 and have been tracking lower since then. They were 28% and 16% for earnings and cash for 2011, right on the 5 year median values and are expected to be a bit lower in 2012.

The current dividend yield is 3.2% and this is higher than the 5 year median of 2.3%. It is also quite a bit higher than the 10 year median dividend yield of 1.55%. This is a dividend paying growth stocks which usually has a relatively low dividend yield, but a relatively high dividend growth.

The total return over the past 5 and 10 years was 0% and 11.7% per year, respectively. The dividend portion of this return was 2% and 2.4% respectively. The capital gain over the last 5 and 10 years was negative and 9.3%. Any money you got over the past 5 years was all dividends, but you lost it in capital gain. The dividend portion of the return over the past 10 years was 20%.

This company’s growth over the past 10 is good than over the past 5 years. 5 years growth is anemic or non-existent. Growth over the 5 and 10 years for revenues is 0% and 9% per year. Earnings per share are negative over the past 5 years and up only 7.5% over the past 10 years. However, they have had no year of earnings loss.

Cash Flow per shares over the past 5 and 10 years is 2% and 12% per year. Growth in Book Value per share is 9% and 14% per year and this one is good. There has not been much growth in number of shares outstanding, so there would not be much difference in earnings and revenues compared to earnings per share and revenues per share.

The Liquidity Ratio is often low and for 2011 it is only 0.98 and the current one for March 2012 is a bit lower at 0.96. However, they do have strong cash flow to compensate. The Debt Ratio is good and has always been and is current at 2.35. The current Leverage and Debt/Equity Ratios are good and they are low at 1.74 and 0.74.

The Return on Equity was low over the past two years and improved greatly for 2011. The 2011 ROE is 12.3% and the 5 year median is also 12.3%. The ROE based on comprehensive income confirms the good ROE on net income, coming in at 13.7% with a 5 year median of 13.7%.

This company seems to be recovering from the last recession. Analysts expect it to do even better next year, but a number of analysts are cautious. It looks to me to be a good stock. It is risky as far as dividend payers good, because it is a growth stock. Tomorrow, I will look at the price and more in depth what the analysts say.

Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally. They are one of the world's leading land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Its web site is here Ensign. See my spreadsheet at esi.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, May 29, 2012

Great-West Lifeco Inc 2

I do not own this stock of Great-West Lifeco (TSX-GWO), but a do have stock in Power Financial (TSX-PWF), the parent company. As of December 31, 2011, Power Financial owns 68.2% of this company. This is my first review of this stock after the December 2011 statements have been received.

I looked at insider trading and find a bit of stock bought by a director under insider buying. There was no insider selling. In the last 3 months insider have been retaining their options and this is a positive. Not only do insiders have stock options, but they have Deferred Share Units and Executive Performance Share Units. There are an awful lot of insiders with stock options. Also Paul Desmarais is shown as having some 72% of the outstanding shares.

There are 134 institutions that hold some 6.8% of the outstanding shares. They have bought and sold shares over the past 3 months and they have sold a net of 1% of their holding during this period. However, there were more buyers than sellers. I look at this information as rather neutral.

The 5 year median low and high Price/Earnings Ratios are 12.55 and 16.34. The current price of $21.07 has a P/E Ratio of 10.13 and so this shows a current cheap stock price.

I get a Graham Price of $24.37. The current stock price of $21.07 is some 13.5% lower. The 10 year low, median and high difference between the Graham Price and the stock price is the stock price being 17%, 32% and 49% higher than the Graham price. By this measure the current stock price is cheap.

The 10 year median Price/Book Value Ratio is 2.81. The current P/B Ratio is 1.66 and only 59% of the 10 year median ratio. This low P/B Ratio points to a current cheap stock price.

The current dividend yield is 5.84%. The 5 year median dividend yield is 4.65%, a value which is 25.5% lower. This current high dividend yield also points to a cheap current stock price. (The 10 year median dividend yield is lower at just 3.02%.)

I find analysts’ recommendations of Strong Buy, Buy, Hold and Underperform. Most of the recommendations are a Hold and that is the consensus recommendation. One analyst said he lowered estimates on this company because Q1 of 2012 was weaker than he had expected. Earnings were toward the lower end of the estimates.

Information on the 1st Quarterly results are at the G&M. They did mostly better than the 1st Quarter of 2011.

One analyst with a Hold recommendation has a 12 months stock price of $25.00. The mean target price is $25.60. Here is what the National Bank Financial said about Great-West Lifeco on April 2012 . Peter Routledge thought this company was a less of a risk in the short term than other Life Insurers. Here is what Michael Goldberg, analyst at Desjardins Securities had to say about Great-West Lifeco.

Estimates have been tracking downward over the past 90 days. However, a number of analysts have also said they like this life company better than other ones. Everyone feels that the dividend is safe and it is a very good yield. The stock is cheap, but it would be a long term buy. I am holding on to the parent company’s stock of Power Financial. I expect to do well in this stock for the long term.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco . See my spreadsheet at gwo.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, May 28, 2012

Great-West Lifeco Inc

For some unknown reason, McAfee Site Advisor is showing all blogspot.ca sites as risky. If you access my site from Canada, you now get it at blogspot.ca. If you access it from the US, you get it at blogspot.com. As a blogspot.com, my site is listed as trustworthy, but as a security risk if you get the site as blogspot.ca. A while ago, Google started to use the ".ca" extension for all persons accessing BlogSpot sites from Canada as blogspot.ca.

I do not own this stock of Great-West Lifeco (TSX-GWO), but a do have stock in Power Financial, the parent company. As of December 31, 2011, Power Financial owns 68.2% of this company. This is my first review of this stock after the December 2011 statements have been received. (See Wikipedia entry. However, this entry has not been kept up to date.)

The last dividend increase for this company was in 2008 which was a 5.8% increase. A lot of insurance companies are in this position. I have tracked this company since 1994 and this is the first period of no dividend increases since then. The 5 and 10 years growth in dividends is at 5.8% and 12.2% respectively. As you can see, the company has had good dividend increases in the past.

The 5 year Dividend Payout Ratios are 70% and 25% for earnings and cash flow, respectively. The 10 year median DPRs are lower at 64% and 24%, respectively. I would suspect that the company would rather have the DPRs for earnings in the 40 to 50% range before increasing dividends.

The current dividend yield on this stock is quite good at 5.8%. This is higher than both the 5 year median dividend yield and the 10 year median dividend yield which is at 4.65 and 3%, respectively. Most analysts expect no dividend increase for 2012. Some expect a small one for 2013 in the range of 2.4%.

Over the past 5 years investors would not have earned any money. The Total Return over the past 5 years is a negative 5.3%. Dividend income is around 4.3% per year. There would have been a capital loss. The Total Return over the past 10 year is better with a positive 6.6% per year return. Dividends would be a large part of this return with them at 4.8% per year and 73% of the total return. Capital gain would have been less than 2% per year.

When you look at growth over the past 5 and 10 years, you can see then the 10 year figures are higher than the 5 year ones. This is true of a lot of companies. The 5 and 10 year growth in Revenue per Share is 1.9% and 3.8%. The growth in Earnings per Share is 0% and 12% per year. The 10 year growth is quite good for EPS.

The 5 and 10 year growth in cash flow per share is 7.3% and 8.6% per year. This is not great, but not bad either. The growth in Book Value per Share is 2.3% and 9.2% per year.

This is a financial company and it is hard to get good current assets/current liabilities figures. The Liquidity Ratio is not much important anyway for financial companies. The Debt Ratio is at 1.07, which is lower than usual for this company. The 5 and 10 year median Debt Ratios are 1.11 and 1.13. However, the assets can cover the liabilities. Cash Flow does not change the Debt Ratios significantly.

For other debt ratios, the current Leverage Debt/Equity Ratio at 20.22 and 18.86 for the end of 2011 are quite high. They are both higher than the 5 year median values of 12.05 and 10.78, respectively. The reason for the higher Ratios is the new accounting rules under which both the assets and debts increased, but the book value did not. The current debt ratios are not better; in fact they are slightly higher.

Information on the 1st Quarterly results are at the G&M.

I will not be buying this stock for the simple fact that I have a fairly large investment in Power Financial that owns some 68.2% of this company. I do have other life insurance companies. I expect that life insurance companies will gradually recover from the financial crisis of 2008, but it will take some time.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco. See my spreadsheet at gwo.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, May 25, 2012

SNC-Lavalin Group Inc 2

I thought it might be useful to sort my dividend paying stocks by Dividend Payment Cycles. See comments blog for information on all stocks I follow. To get new Table of stocks I follow and their Dividend Payment Cycles click here.

I own this stock of SNC-Lavalin (TSX-SNC) and I had for some time. I first bought this stock in 1998. I sold some in 2008 because it had grown so much and was too high a percentage of my portfolio. I have a total return of 27.2% per year on this stock. Some 2.1% per year of this return is dividends and the rest at 25.1% per year is capital gain. Only some 7.8% per year of my return is attributable to dividends.

Over the past year there has been $7.5M of insider selling and $7.5M of net insider selling with a very minimal insider buying. However, all the selling was at the end of last year, a couple of months prior to the drop in the stock that occurred in late February 2012. Over the past month, insiders have been retaining their options and this is a good sign.

There are 130 institutions that hold 42% of the shares of this company. Over the past 3 months they are bought and sold this stock and there were net sellers of 6 (with 104 buyers and sellers). However, overall institutions have lowered their investment in this company by 3%. This is a negative. (You should not read too much into this as institutions tend to trade like a herd sometimes.)

The 5 year median low and high Price/Earnings Ratios are 14.63 and 24.93. The current P/E at 16.2 is just below the 5 year median of 20.50. This would show that the current price is reasonable.

The Graham price is $26.66 and the stock price of $39.72 is less than 1.5% higher. The10 year low, median and high difference between the Graham price and stock price is the stock price being 56%, 96% and 138% higher than the Graham price. (This is a growth stock, and so it is quite usual for the stock price to be higher than the Graham price.) This would indicate that the stock is cheap, especially since it is so close to the Graham price.

The 10 year median Price/Book Value Ratio is 5.06 and the current P/B Ratio is 2.82. The current Ratio is just 60% of the 10 year median ratio and this would point to a cheap stock price.

The 5 year median dividend yield is 1.34%. The current dividend yield is 2.22%, which is some 66% higher. This shows a cheap stock price. (10 year median dividend yield is even lower at 1.09%.)

When I look at analysts’ recommendations I find Strong Buy, Buy and Hold recommendations. There are as many Strong Buys and there are Holds. The consensus recommendation is a Buy.

Consensus 12 months price is $47.50. This implies a 21.8% total 12 month return. A Buy recommendation came with a 12 months stock price of $48.00 and this implies a 23% total 12 month return. Do not forget that most analysts consider this stock a high risk.

There are a lot of negative comments on this stock. Some analysts are worried that the company was making too much money in the Middle East and this may have to be replaced. Others are worried about the company getting new contracts. However, there are two recent G&M articles about the company getting new contracts. See SNC-Lavalin-LED joint venture awarded contract to execute EPCM services on Cobre Panama project article. Also see SNC-Lavalin/Cintra Awarded 407 East Highway Project in Ontario article.

One analyst thought that you should only buy this stock if you have a long term horizon on the stock. Another analyst said it is a great opportunity if you are looking growth over the next 1 to 3 years. Another problem the company has is that it must find a new CEO.

There was a sell off this stock because of problems the company was having. I think that these problems will be overcome and that SNC will continue to be a growth company. (Growth companies have higher P/E ratios and higher P/B Ratios.) I am probably not the only one to think this way as one site indicated that the short selling activity on this stock is low.

See dividend watchdog’s take of the dividends on this stock at his site.

My SNC stock is all currently all in my Pension account. On a long term basis, I am selling stock and moving money to my Trading account. SNC is still a stock I want for the long term. Today, I bought just 100 shares of this stock for my Trading Account. I do not have much spare cash at this point. I put money together from my Line of Credit, my ING account and cash in my trading account.

My long term goal is to move these shares from my Pension account to my Trading account. I do not need money current in my Pension account, so I can sell what I have there at a better price (hopefully). I know that the stock was lower just recently, but $39.46 is still a good price.

Now this is not your normal dividend paying stock. The dividend yield is usually quite low, but so are the Dividend Payout Ratios. This stock is a dividend paying growth stock. The growth in dividends has been great at over 20% over the past 5 and 10 years. I like a mix of low, median and high dividend payers, and a mix of low, median and high dividend growers. This stock fits nicely into what I want.

Please note that this year, the increase was only 4.8% and analysts do not expect any more for 2013. I expect dividend increases will again pick up when the company overcomes their current problems.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC. See my spreadsheet at snc.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, May 24, 2012

SNC-Lavalin Group Inc

Dividend Payment Cycles are important so you know when you will get dividends. See comments blog for information on all stocks I follow.

I own this stock of SNC-Lavalin (TSX-SNC) and I had for some time. I first bought this stock in 1998. I sold some in 2008 because it had grown so much and was too high a percentage of my portfolio. I have a total return of 27.2% per year on this stock. Some 2.1% per year of this return is dividends and the rest at 25.1% per year is capital gain. Only some 7.8% per year of my return is attributable to dividends. This is another dividend growth company.

My above return includes the recent 30% drop in stock price. The G&M has a recent article on “Don’t count SNC-Lavalin out just yet.” See G&M article. The company is missing money and there are questions about their activities in Libya. However, this company is into hundreds of countries and, unfortunately, there are a lot of badly run countries. No wonder they hit a snag. Personally, I am not much worried. I feel the company will right itself.

Dividend yield on this stock is low with a 5 year median of 1.34% and with an even lower 10 year median of 1.09%. However, the growth in dividends is great with 5 and 10 years growth at 23% and 24% per year, respectively. I have had this stock for 14 years and my dividends have grown 1000% and the yield I get on my original investment is 25.9%. This is the value of investing in companies with low dividends and high dividend increases.

However, the recent dividend increase was just 4.8% and this is the lowest increases for as long as I have held this stock. The other low was in 1998 when the increase was 5%. Total return over the past 5 and 10 years is 11.69% and 19.77% per year, respectively. The dividend portion of this total return is 1.59% and 1.9% per year and the capital gain is 10.17% and 18.15% per year, respectively. The portion of the return attributable to dividends is 13% and 8% per year.

Growth on this stock is generally quite good and usually better over the past 10 years than over the past 5 years. Revenues and earnings are the lowest in growth. Revenue per share has grown over the past 5 and 10 years at 7% and 11.9% per year, respectively. EPS has grown at the rate of 4.5% and 30% per year, respectively.

Cash flow per share growth is better at 16.8% and 17.3% per year over the past 5 and 10 years. Book Value per share has been growth at just over 15% per year for both these time periods.

Debt ratios on this company have been ok, but never great and have fluctuated. The current Liquidity Ratio is just 0.98 and the cash flow coverage is ok. The current Debt Ratio is low, but ok at 1.30. The current Leverage and Debt/Equity Ratio are rather typical for this sort of company at 4.38 and 3.37, respectively.

The Return on Equity for 2011 is 20.6% and the 5 year median is 25.1%. The ROE for comprehensive income was lower at 17.6% and the 5 year median is 22.6%. You want both these ROEs at about the same level as the ROE on comprehensive income confirms the quality of the ROE on net income. In this case, all the ROEs are very good, but there is a significant difference between the ones for 2011. On the other hand, the good range for ROE is 10% to 15% and these ROEs are higher.

I am pleased with this stock and intend to continue to hold it. It really has performed the way I have expected it to.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC. See my spreadsheet at snc.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, May 23, 2012

Richelieu Hardware Ltd 2

I have updated yesterday’s blog entry. Whether you are currently making any money may depend on your point of view at comments blog.

I own this stock of Richelieu Hardware Ltd. (TSX-RCH). I first bought this stock in 2007 and then some more in 2009. Since this stock is in two separate accounts, I can see how each purchase has done. For the stock purchased in 2007, I have made a return of 7.6% per year. For the stock I purchased in 2009, I have made a return of 24.9% per year. I realized that the stock was quite low in 2009 when I bought it and that is just why I bought it then.

When I look at insider trading, I find some $1.7M of net insider selling and very little insider buying. However, $1.7M is a very small portion of the market cap of this stock (that is less than 1%). Over the past month a number of officers have purchased small number of shares via the company’s plan at $32.55 and one officer has cash in his options. Insiders have options and also Action Deferred Units and Subscription Rights Actions Deferred Units.

The CFO and officers have more options than shares. The directors may not have more options than shares, but they have lots of Deferred Units, which are a sort of option. The CEO has around 1.4M shares in this company worth around $49M.

QV Investors still seem to have shares in this company and they talk about their investment in a recent report dated January 2012. Some 22 institutions own 45% of this company. In the last 3 months they have increased their investment in this company by 15%. This is a positive.

I get 5 year median low and high Price/Earnings Ratios of 12.05 and 16.65. With the current stock price of $31.84, the current P/E ratio is 15.38 and this is between the median P/E of 14.37 and high P/E of 16.65. It shows the price is reasonable, if a bit on the high side.

I get a Graham price of $23.96 and the current stock price of $31.84 is 33% above it. The 10 year low, median and high difference between the Graham price and the stock price is the stock price being some 12.5%, 41% and 52% above the Graham price. This put the stock price between the low and median values and shows a reasonable stock price.

I get a 10 year median Price/Book Value Ratio of 2.74. The current P/B Ratio is 2.58, which is 94% of the 10 year ratio and shows a reasonable stock price. (If you are looking at this report more than a few weeks after I have published it, you can get the current P/B Ratio if you go to the Reuters stock site and use symbol of RCH.TO where it says to search for a stock. Click on the “Financials” tab to get the current P/B Ratio.)

The 5 year median dividend yield is 1.58% and the current yield at 1.51% is some 5% lower. This put stock price still in a reasonable category, but a bit on the high side.

There seems to be only a couple of analysts following this stock and the recommendations seem to be Buy and Hold, with a consensus recommendation of Buy. The Buy recommendation comes with a 12 month stock price of 35.00. The consensus 12 months stock price of $34.30 implies a total return over the next 12 months of 9.2%.

A globe and mail article calls this stock a buy-and-forget stock for conservative investors.

I will retain what I have in this company. I am not looking for a stock which has the characteristics of this stock currently, but if I was this would be a stock I would consider. It is only just over 1% of my portfolio so I do have room to buy more of it. (Stock characteristics are low dividend, good dividend increases.)

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. 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.

Tuesday, May 22, 2012

Richelieu Hardware Ltd

Posted blog entry on whether I am currently making any money and on dividend payers at comments blog.

I own this stock of Richelieu Hardware Ltd. (TSX-RCH). I first bought this stock in 2007 and then some more in 2009. Since this stock is in two separate accounts, I can see how each purchase has done. For the stock purchased in 2007, I have made a return of 7.6% per year. For the stock I purchased in 2009, I have made a return of 24.9% per year. I realized that the stock was quite low in 2009 when I bought it.

Over all I have made a return of 19% per year. 1.7% of my return is from dividends and 17.3% of my return is from capital gain. Only some 9% of my return is from dividend income. This purchasing also shows the value of purchasing shares over time rather all at once.

Dividends are low on this stock which has a 5 year median dividend yield of 1.58%. However, dividends in recent years have been higher than historically as the 10 year median dividend yield is lower at just 1.18%. Dividends were only started on this stock in 2002, so this stock has not been a dividend payer for long.

The stock has an inconsistent record when it comes to dividend raises. There was one year when dividends where flat and one year when they declined, but the rest had increases. The 5 and 9 year growth in dividends is quite good at 12.9% and 16.7% per year, respectively. This stock would be considered to be a dividend growth stock.

I started to following this stock initially because it was on the Investment Reporter list from MPL Communications. Their site is called Advise for Investors. They sometimes cover this stock in their Advice Hotline email for which you can get a free subscription from their site. You can get their latest advice on this stock from their site if you ask for a quote on symbol RCH, click on profile tab and then click on Advice tab.

The growth on this stock is mainly quite good, with the 10 year growth figures better than the 5 year ones. Revenues per share have grown at the rate of 8.5% and 9.6% per year over the past 5 and 10 years. EPS has grown at the rate of 6.5% and 10.7% per year over the past 5 and 10 years. Cash Flow has grown at the rate of 8.7% and 11.8% per year over past 5 and 10 years. Book Value has grown 10.3% and 13.9% per year over the past 5 and 10 years.

The debt ratios are quite good also. The Liquidity Ratio has always been very good with a current ratio of 4.20 and a 5 year median of 4.00. The Debt Ratio extremely good with a current ratio of 5.32 and a 5 year median of 5.49. The current Leverage and Debt/Equity Ratios are also good at 1.25 and 0.23, respectively.

The Return on Equity is in the good range of 10% to 15% at 14.3%. The 5 year median ROE is a bit better at 15.5%. The Return on Equity based on comprehensive income is in the same range with an ROE of 14.3% and a 5 year median value of 14.3% also.

Richelieu has also done well in their first quarter of 2012 and news is mostly good. See G&M article.

Personally, I think that a dividend paying portfolio should have stocks with a range of dividend yields. This is because low dividend yields often come with good dividend growth and good capital gain growth. This would also be a suitable stock when you are growing your stock portfolio as lower dividends mean lower taxes.

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. 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, May 18, 2012

Manitoba Telecom Services Inc 2

I own this stock (TSX-MBT). I bought some of this stock for all three of my accounts of Trading, RRSP and Pension Locked-in in 2006. I was looking for a save dividend payer and TD Waterhouse was recommending it. In 2010, I was giving hope of earnings much from this stock and sold all from my Trading and Pension Accounts and some from my RRSP. I still have some in my RRSP account.

When I look at insider trading I find very, very little of insider buying and no insider selling. The insider’s not only have options, but option-like things like Rights Performance Share Units and Rights Restricted Share Units. Directors also have Rights Director Compensation Units. These new options-like vehicles seem to be replacing old options in some cases. Everyone has more options or options-like vehicles than shares. The CEO does own shares worth just under $3.4M at today’s prices. Otherwise there is not much share ownership by insiders, but there is a bit.

Some 68 companies own almost 24% of the shares in this company. Over the past 3 months they have bought and sold shares. Their ownership in shares is down by just over 9%. There were the same number of buyers and sellers. This is a bit of a negative.

I get 5 year median low and high Price/Earnings Ratios of 16.19 and 19.48. (The corresponding 10 year median values are 13.26 and 17.50). In any case, the current P/E Ratio of 13.40 on a price of $34.03 would suggest that the stock price is relatively low.

I get a Graham price of $26.16. The 10 year median low, median and high difference between the Graham price and the stock price is the stock price being 0%, 15% and 32% above the Graham Price. With the current stock price being 30% above the Graham price it would seem that the stock price is relatively high.

The 10 year median Price/Book Value Ratio is 2.05 and the current P/B Ratio is 2.84. The current ratio at 2.84 i8s some 36% higher than the 10 year median ratio and would suggest a relatively high stock price. The main reason for the relatively high stock price showing in the last two tests is because the book value has been tracking down over the past while. It has been tracking down because the company has paid out too high a portion of their earnings in dividends.

The current dividend yield is 5% and the 5 year median dividend yield is some 38% higher at 6.9%. This would also suggest a relatively high current stock price. The tests I use show mixed results, but mostly show that the stock price may be relatively high currently.

The analysts’ recommendations are all over the place, with Strong Buy, Buy, Hold, Underperform and Sell. However, the most recommendations are in the Hold category and the consensus recommendation would be a Hold. The Hold recommendations either like other Telecom stocks better, or feel that you cannot expect much beyond dividends on this stock. Only a capital gain is visualized if new telecom legislation allows in foreign companies and then it or Allstream might be sold at a profit.

One analyst has a 12 month stock price of $40 as they expect that the Allstream division will be sold after the Federal budget of June changes the rules about foreign telecom ownership. They give this stock a Strong Buy. (The loosening of the telecom market was announced on May 14th, 2012. The Federal government scrapped foreign ownership rules on carries with less than 10% of the market.)

One site gives the consensus 12 month stock price of $33.90 and another as $35.00. The first one is lower than what the price is today. Everyone expects the dividend to be safe. No one expects any dividend increases in 2012 or 2013.

Some analysts a worried that their pension plans insolvency will again become a problem in 2013. Last week a couple of analysts downgraded this stock from Buys to Holds after the company posted positive results for the first quarter and stock rose some 3%. See article in the G&M.

I think I will still look for an exit point and try to decide what I should replace this with. Maybe I should buy Ag Growth International (TSX-AFN).

This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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, May 17, 2012

Manitoba Telecom Services Inc

I own this stock (TSX-MBT). I had bought some of this stock for all three of my accounts of Trading, RRSP and Pension Locked-in in 2006. I was looking for a save dividend payer and TD Waterhouse was recommending it. In 2010, I was giving hope of earnings much from this stock and sold all from my Trading and Pension Accounts and some from my RRSP. I still have some in my RRSP account.

Over all, I have a Total Return of 3.5% per year. However, dividend portion of total return is 6.7%, so I lost capital. My investment in this company is better in my RRSP with a Total Return of 4.05%. Here again, the dividend portion is 6.7% of the total return. I have lost some 12% in capital gains since I bought this stock. This certainly has not been one of my best moves in stock buying.

This is a dividend paying stock which reduced their dividends in 2010 by almost 35%. The move was not entirely unexpected because they have been paying over 100% of their earnings in dividends since 2007. The Dividend Payout Ratio from Cash Flow was not that bad at around 34%. DPRs for 2011 are expected to be 67% for earnings and 25% for cash flow. Analysts do not expect any dividend change for 2012 or 2013.

Total Return is not good, with a negative 2.5% per year over the past 5 years. Total return has grown just 4.7% per year over the past 10 years. The dividend portion of total return has been 6% and 6.2% per year over the past 5 and 10 years. Therefore there has been capital loss over both these time periods.

Growth has generally not been good, with 10 year growth being better than the 5 year growth. Basically 5 year growth is non-existent. For example revenue growth for the last 5 years is a negative 1.5% per year. 10 year growth is 4.3% per year.

The 5 year growth in earnings is a big negative 10.3% per year. However, 10 year growth is good at 8.5% per year. Growth is cash flow is 0% for the last 5 years and 5.2% per year for the last 10 years.

Growth in Book Value is non-existent. My spreadsheet shows spreadsheets shows 5 and 10 year negative growth of 12% and 1.6% per year. Book Value has been going down since 2007. (They were paying more than 100% of earnings in dividends.) Also, there was a 40% decreased in 2011 showing up with the change to the new IFRS accounting rules.

About 28% of the decrease seems to be directly related to the new accounting rules. If the new accounting rules had been in effect between 2009 and 2011 the decrease in Book Value for 2010 would have declined 10.5% rather than the originally reported 2.8%. The decline in 2011 would have been 6.9% rather than 40%. However, whichever way you look at it the book value is declining and has been for a while. This is not good.

The Return on Equity for 2011 looks very good at 21.2%. The 5 year median ROE is also good 10.4%. However, when you look at the ROE based on comprehensive income it is very much lower at 3%. A lot of the difference is because the company lost money in their employee’s defined benefit and other benefits plans. You worry about a company with a big difference in the ROE on net income and on comprehensive income as it shows that the quality of the net income for the company may not be good.

The last thing to look at is debt ratios. The current Liquidity ratio is really low at just 0.45. If it less than 1.00 it means that current assets cannot cover current liabilities. If you add in cash flow after dividends you do not quite get to 1.00, but get to only 0.99. The current Debt Ratio is a little low at 1.42. The current Leverage and Debt/Equity Ratios are bit high, at 3.40 and 2.40.

I think I need to find an exit point and get some stock to replace this one.

This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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, May 16, 2012

Genivar Inc. 2

I have updated my investment comments site at blog3.

I own this stock (TSX-GNV). I made two purchases at the end of 2011 and according to Quicken I have made per year return of 33%, but Quicken rather distorts such things when the period is less than one year. My stock is up is only up 12.5%. Some 8.3% of my return is from dividends.

When I look at insider trading, I find a minimum of insider buying and no insider selling. There are a few insiders with several million dollars of shares of this company, ranging from $6M to $20M. (It is the CEO with $20M in this company.) There are no stock options. This is positive.

There are 37 institutions that won some 30% of this company. They have bought and sold stocks over the past 3 months and now hold some 5.3% more shares. There are also 10 more buyers than sellers. I think that this shows positive support for this company.

I get 5 year median low and high Price/Earnings Ratios of 10.04 and 17.90. The current P/E Ratio of 14.87 is just above the median P/E of 14.35 and would suggest that the current stock price of $24.24 is reasonable.

I get a Graham price of $23.81 and the current stock price of $24.24 is 1.8% higher. The 10 year median low difference between the Graham Price and the stock price is the stock price being 22% lower. The 10 year median and median high difference between the Graham price and the stock price is the stock price being 4% and 25% higher than the Graham price. The current difference between the Graham Price and stock price suggests a reasonable stock price.

The 10 year median Price/Book Value Ratio is 1.87. The current P/B Ratio is 1.57 and this is 83% of the 10 year median and suggests a reasonable to low current stock price. The current dividend yield is 6.2% and the 5 year median dividend yield is 5.4% which is some 7.2% lower and suggests a reasonable stock price.

When I look at analysts’ recommendations I find Strong Buy, Buy and Hold recommendations. However, there is only one Strong Buy and many Hold recommendations. The consensus recommendation would be a Hold.

Earnings growth looks at good with a growth rate of 9.7% per year. However, earnings in 2011 included a one-time deferred income tax recovery resulting from a change in legal structure. Without it earnings would have been $1.63 and growth would just be 5.2%. Earnings of $1.63 is also what is expected in 2012. It is lower than both for 2009 and 2010. However, earnings are expected to rise some 15% in 2013.

A lot of analysts expect the company to have lower revenue in 2012 than in 2011. They also expect a rise in revenues in 2013. Revenues increased in the first quarter, but not as much as analysts had expected. One analysts with a Hold recommendation said that they liked the company’s long term outlook; they felt that the stock was fairly price currently. That means that they do not expect much short term growth in the stock price.

One analyst with a Hold recommendation called 2011 results uninspiring. After the Q1 results were made public a number of analysts cut their 12 month stock price. The analysts that did not put a Hold recommendation on this previously lower their recommendations from Buy to Hold. Analysts do not expect a special dividend this year, nor do they expect dividends to increase in 2012.

The 12 month consensus stock target is $28.50 and this implies a 24% total return for 2012.

A good write up on this stock is at Canadian Dividend Stock site.

See 1st quarter’s results in G&M article. They did miss analysts’ estimates. See Financial Post. In this story, unlike yesterday’s, AltaCorp Capital’s analysts downgraded this stock from Buy to Hold.

As I said yesterday, I am holding on to the shares I have, but will keep an eye on what they do with dividends over the next couple of years. The company is involved in the construction industry and this part of the economy has yet to recover from the recent recession. I still think that my purchase of this stock in 2011 was a good move.

Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Mainly in Ontario and Quebec, but has some international exposure. Its web site is here Genivar. See my spreadsheet at gnv.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, May 15, 2012

Genivar Inc.

I own this stock (TSX-GNV). I made two purchases at the end of 2011 and according to Quicken I have made per year return of 33%, but Quicken rather distorts such things when the period is less than one year. My stock is up is only up 12.5%. Some 8.3% of my return is from dividends. Even though the 5 year median dividend yield is just 5.4%, this company has given out a couple of special dividends over the past few years.

I have bought this stock because of an article I read in the G&M in September 2011. See the article. This could also be a cautionary tale. They got things wrong about Genivar. They give examples of what they say are six profitable, growing companies that have a dividend payout ratio of less than 80 per cent and whose dividend yield has grown over 25 per cent from six months ago.

However, why Genivar fits is that they gave a special, non-repeatable, dividend in 2011. I never invest without doing my own investigation. I turned up this error, but I still liked the company when I investigated it, so I did buy it. You can check such simple things like what dividends were paid at Yahoo Finance . This stock would have a symbol of GNV.TO on this site. Under historical prices, you can find what dividends have been paid for various periods.

In fact, a thing I liked about this company is that in the face of uncertainty, they rewarded their shareholders with a special dividend because they could, but they did not raise the dividends. I am aware that not all dividend investors like this, but it is the prudent move. Good companies only increase their dividends when they can see that they can sustain them.

This company has not been around all that long. It had its IPO in May 2006 and went public as an Income Trust under the name of Genivar Income Fund (TSX-GNV.UN). When it was to become a corporation, it stopped increasing its dividends (2010). However, the Dividend Payout Ratios were not all that high for an Income Trust. The 5 year median DPRs for earnings is 75% and for cash flow is 45%.

However, analysts do not expect this company to do as well in 2012 as it did in 2011. DPR for earnings is expected to be rather high at 92% for earnings. The results for the first quarter of 2012 are in and the EPS came in at the bottom end of the estimates for this quarter. See first quarterly report at G&M. See comments on 1st quarter at G&M. Desjardins Securities noted earnings fell short of their expectations for the 1st quarter, but they still upgraded their recommendation from Hold to Buy.

Before 2010 this company had a good record of dividend increases with a 5 year growth in dividends of 24% per year. However, you have to wonder if it will increases dividends in the future, because on their site they say “The Corporation’s general policy is to pay a dividend representing the greater of (1) $1.50/share; or (2) 50% of net income per adjusted common share, giving consideration to cash position during the year, future cash flow requirements as well as growth and investment opportunities.” This would imply that they will keep the dividends level and give special dividends as they can.

The 5 year total return on this stock to the end of 2011 is 22.17% per year, with the dividend portion at 8.22% and the capital gains portion at 13.95%. Dividends make up 37% of the return.

There is only some 5 years of data on this company, but most items I follow have good growth, except for cash flow. Cash flow growth over the past 5 years is up just 5.8%. Growth in revenues is good at 14.9%. Earnings growth is good at 9.7% and book value growth is good at 9%.

All debt ratios are good. The current Liquidity Ratio is very good 2.11 as is the current Debt Ratio of 3.74. Both the current Leverage and Debt/Equity Ratios are good at 1.37 and 0.36.

The Return on Equity is just within the good range of 10% to 15% with a ROE at the end of 2011 at 10%. The 5 year median ROE is a bit better at 11.4%. The ROE on comprehensive income confirms ROE on net income with a value of 10%.

At the moment, I am pleased with this company. However, I intend to keep an eye on dividends. I prefer companies that give increasing dividends.

Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Mainly in Ontario and Quebec, but has some international exposure. Its web site is here Genivar. See my spreadsheet at gnv.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, May 14, 2012

Progressive Waste Solutions Ltd 2

I own this stock (TSX-BIN, NYSE-BIN). I first bought this company as BFI Canada Income Fund (TSX-BFC.UN) in 2007. I bought some more after the stock price went down in 2010. I have lost some 2.2% per year on this stock. Or, the stock price is down some 14%. It is because of dividends of approximately 3% per year that I have not lost more.

When I look at insider trading, I find $12.3M of insider selling and $2.2M of insider buying. About $11.1M of insider selling was by directors in August of 2011. This selling would seem to be by or mostly by Keith Carrigan, who is currently a director but was the CEO and founder of this company. The CEO, CFO and directors all have more options than shares. However, the reason that the directors have more options than shares is because of the number held by Carrigan who used to be the CEO.

Half the current insider buying is by directors and the rest by CEO, CFO and an officer of the company. The current buying is a good sign. Also, this company is buying back shares on the open market for cancellation. There were big increases in shares in 2009 and 2010. Money was used to pay down debt and to buy assets.

There are 162 institutions that hold 76% of the shares of this company. They have bought and sold shares over the past three months with 3 net buyers and an increase in their shares held. However, the increase in shares is less than 1% and so does not tell us much. But it does show that these institutions are not negative about this company.

I get 5 year median low and high Price/Earnings Ratios of 12.26 and 33.09. This is a broad range and the 5 year median high is rather high. The current 18.08 on a stock price of 20.31 is lower than the 5 year median of 21.35. It is on the high side, but not that high. By this measure the price is reasonable.

I get a Graham Price of $16.82. The low and high difference between the Graham price and the stock price is the stock price being 23.7% and 79% higher than the Graham Price. The current stock price of $20.31 is some 21% above the Graham Price. This shows a relatively good stock price.

I get a 10 year Price/Book Value Ratio 1.79 and a current one of 2.18, which is only some 1% higher. This is not much of a difference. Part of the reason for this is the earnings loss for 2011. This would point to a reasonable stock price.

The last test is the dividend yield, and this company has a 5 year median dividend yield of 6.33%. The current dividend yield is 2.76, which is some 57% lower. Normally, this would show a high relative stock price. However, when this company changed from an Income Trust to a Corporation, the management decided they wanted a growth company and therefore lowered the dividend by 72.5% to go for a dividend yield of around 2% to 3%.

This is a dividend paying company and the stock prices on dividend paying companies tend to increase about as much as the dividends are increased. Last year the dividends were increased by 12%.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. A number of analysts have downgraded this stock recently because of the missed 1st quarterly earnings estimates, with downgrades from Strong Buy to Buy and from Buy to Hold.

The 12 months stock price target is $24.30. This implies as 22.4% total return from current stock price of $20.31. A Buy analysts gave a 12 months stock price of $26 $US. Analysts think that the company is well-run, but also complain about the problems they seem to be having in the US Northeast division. (It is a company they purchased in the US Northeast for which they had to write down their good-will value and therefore got an earnings loss last year.)

Analyst had thought that this company would be fairly non-cyclical because it was into garbage, but it has not turned out that way. I had pointed out this problem with a link to an article by David Berman yesterday. (See David Berman points out in a G&M Article how recessions are bad for garbage companies.) There is also a fairly recent article on the site 24/7 Wall Street about Garbage and Waste Management companies having a current hard time. See article.

The blogger My Own Adviser talked about buying this stock in December 2011. The site Benzinga talks about BMO’s recent downgrade of this stock. See Benzinga.

I am going to hold on to my shares as I think the problems will clear up when the economy does. The problem is no one knows when this will occur. However, it is May and people are worried about Greece.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste . See my spreadsheet at bin.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, May 11, 2012

Progressive Waste Solutions Ltd

I own this stock (TSX-BIN, NYSE-BIN). I first bought this company as BFI Canada Income Fund (TSX-BFC.UN) in 2007. I bought some more after the stock price went down in 2010. I have lost some 2.2% per year on this stock. Or, the stock price is down some 14%. It is because of dividends of approximately 3% per year that I have not lost more.

The company changed from BFI Canada Income Fund (TSX-BFC.UN) in October 2008 to BFI Canada (TSX-BFC). This was a change from an Income Trust to a corporation. In June 2009, the company changed to IESI-BFC Ltd (TSX-BIN). The company was known as IESI in US and BFC in Canada. In May 2011 the company changed to Progressive Waste Solutions Ltd (TSX-BIN). This is all very confusing if you are trying to track a company. The company also changed their reporting to US$ and their accounting rules to US GAAP (from CDN GAAP) in 2009.

When they changed from an Income Trust to a corporation they decreased their dividends by 72% between 2009 and 2010 and changed dividend payments from monthly to quarterly (cycle 1). The decrease in dividends improved their Dividend Payout Ratios. As an Income Trust they were paying over 260% of earnings in distributions. Last year the DPR for earnings was 66%, this year’s is 48% (using adjusted EPS) and next year’s is expected to be 49%.

The DPR for cash flow was never so high, coming in at around 50% when it was an income trust. Last year the DPR for cash flow was 21%, this year’s is 16% and next year’s is expected to be 35%. One of the things that the old Income Trust companies had to do was bring their DPRs in line with corporation.

If you look at dividend growth over the past 5 and 10 years, you will see that dividends are down 20% per year over the past 5 years and down 4.4% over the past 10 years. This may not look good, but the fact is that a lot of Income Trust companies had to reduce their dividends. They had a good record of dividend increases prior to their change to a corporation. Also, they raised their dividends 12% in 2011.

Another thing to mention about this company is that a number of analysts look at what they call “Adjusted” net income and EPS. For 2011 they had a net income loss. However, most of this loss was due to non-cash goodwill impairment charge related to their U.S. northeast operations. I do not usually use such things, but sometimes you must to make sense of what is really happening on a stock.

When I look at total return over the past 5 and 10 years on this company I find that total returns are down 1.7% per year over the past 5 years, but up 17% over the past 10 years. The dividend portion of total returns over the past 5 and 10 years is at 4.5% and 9.9% per year. Capital gain over the past 5 and 10 years is negative 6.2% and positive 7.1% per year respectively.

All gains over the past 5 years were in dividends. Over the past 10 years, some 54% of the total return was in dividends. However, the current dividend yield is just 2.6%. Going forward you should only expect the dividend portion of the total return to be in the 2 to 3% range. Corporations have lower dividend yields than the old Income Trust companies.

Generally speaking the company has had better growth over the past 10 years than the past 5 years. This is typical of a lot of companies at the present time. Revenue per share growth is just 2% per year over the past 5 years, but 12% per year over the past 10 years.

For EPS, if you use the adjusted EPS for 2011, earnings are up 13% and 15% per year over the past 5 and 10 years. Cash flow is up 0% over past 5 years, but up 13.5% over past 10 years. Book Value is a different story, as it is down 3% per year over past 5 years and only up 2.4% per year over the past 10 years. Income Trust companies had little if any growth in book value and generally it when down. This is because Income Trust companies paid out too much in distributions. This company used to be an Income Trust.

As far as debt ratios goes, the current Liquidity Ratio is rather low at 0.88. It means that current assets cannot cover current liabilities. However, the company has a good cash flow. The current Debt Ratio is quite good at 1.72. The current Leverage and Debt/Equity Ratios are fine at 2.38 and 1.38.

The Return on Equity, if you use the adjusted net income the ROE for 2011 is 10.2%. If you use the one from the statements it is a negative 14.9%. The ROE based on comprehensive income is a negative 16.5%, which is not far off the one based on net income. This company has had historically quite low ROEs running around 5 to 6%.

For the first quarter of 2012, the company’s EPS came in lower than analyst had expected and they have lowered their EPS estimates for 2012, but kept the same ones for 2013. The company said that they expected lower EPS for the first quarter. See G&M article. David Berman points out in a G&M Article how recessions are bad for garbage companies.

I will hold on to the shares of this company that I have as I expect that it will do better when the economy picks up.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste. See my spreadsheet at bin.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, May 10, 2012

Power Financial Corp 2

I own this stock (TSX-PWF). I first bought this stock in 2001. I then bought some more in 2004 and 2011. I have made a total return on this stock of 7.65% per year. Dividend return is 4.19% and capital gain is 3.46%. Dividends make up some 54.8% of my returns.

Over the past year there has been no insider trading, no insider selling and no insider buying. The CEO has a lot of options. With his options at 4.2M shares they are currently worth $114M. Paul G. Desmarais has just over 487M shares and owns approximately 66% of this company. He is also a director.

Not surprisingly, because so many shares are held by insiders, institutions hold only 10% of the shares of this company. There are 115 institutions with shares and over the past 3 months they have sold more than they have bought, but their share ownership is down less than 1%.

I get 5 year median low and high Price/Earnings Ratios of 11.90 and 16.04. The current P/E Ratio of 10.51 would suggest a low current stock price. (The 10 year median low P/E Ratio is 11.78, so the stock has not been relatively high over the past 5 years.)

I get a Graham price of $30.61 and the current stock price is 12% lower. The 10 year median difference between the Graham Price and low stock price is the stock price being 1% lower. The 10 year median difference between the Graham price and median and high stock price is the stock price being 15% and 29% higher than the Graham Price. This test shows the current stock price of $26.90 as being relatively low.

The 10 year median Price/Book Value Ratio is 2.36. The current P/B Ratio is 1.65 and is about 30% lower. This shows the current stock price to be relatively low.

The current dividend yield of 5.2% and it is 13% higher than the 5 year median of 4.6%. The 10 year median high dividend yield is just 3.3%. The yields on this stock have been quite high since the latest bear market. Also this company has not increased their dividends since 2008. By this measure the current stock price is relatively low.

When I look at analysts’ recommendations, all I find are Hold recommendations. The 12 month target price is $30.20. This would imply a 17.5% total return over the next 12 months. This company holds a lot of Life Insurance companies. Market downturns affect these sorts of companies and the worry is there will be a meaningful stock market downturn in our near future. See comments in blog3.

A number of analyst mention the current good dividend yield and a number mention good management. One analyst mentioned lack of earnings growth. It is true that earnings are down over the past 5 years, but they have been growing nicely since 2008, they just have not made it back what they were making in 2006 and 2007. 2008 saw a drop in earnings of 36%.

One analyst said that this company was a great way to get exposure to Great-West Life and IGM Financial. One analyst just changed their recommendation from Buy to Hold because Great-West’s first quarterly results for 2012 missed consensus estimate. He thought that both Great West and IGM have a weaker earnings outlook now.

Some people like Power Corp to Power Financial, however, some people always say this. Power Corp is more than just financials and therefore is considered to be less volatile. I also track Power Corp.

I am holding on to the shares I own in this company. It is not that analysts do not like this stock; they just seem unenthused about it currently. My long term expectations for this stock are earning around 4% dividends and 4% capital gains. However, in the past this stock has tended towards 3% dividends and 5% capital gains. These sorts of dividend payers tend to go up with dividend increases and there has not been any lately.

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.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, May 9, 2012

Power Financial Corp

I have updated my investing comments blog today about the idea of selling in May. See blog 3.

I own this stock of Power Financial Corp (TSX-PWF). I first bought this stock in 2001. I then bought some more in 2004 and 2011. I have made a total return on this stock of 7.65% per year. Dividend return is 4.19% and capital gain is 3.46%. Dividends make up some 54.8% of my returns. My long term expectations for this stock are earning around 4% dividends and 4% capital gains.

Until recently, this company had a great record of increasing dividends. The growth in dividends over the past 5 and 10 years is 7% and 12.3% per year, respectively. The recent recession has been hard on insurance companies and this company owns lots of insurance companies. They have not increased their dividends since 2009.

The 5 year median Dividend Payout Ratios for this company is 67% and 18% for earnings and cash flow. The DPRs for 2011 were 58% and 18% for earnings and cash flows. However, if we based the DPR on cash flow excluding changes in working capital (or changes in current assets and current liabilities), the 5 year median DPRs become 16% and the 2011 become 25%.

The DPRs are good. Analysts talk about the dividend being safe. No one is currently talking about the company increasing dividends at this point in time. The company is proud of their history of dividend payments, but they also do not say when they may resume increasing them.

Total return has not been great over the past few years. The 5 year return is negative with a decline of 3% per year. The dividend return over the past 5 years has been at the rate of 4.2% per year. The 10 year total returns are better at 7.5% with dividends at 4.5% and capital gain being 3%. Over the last 10 years, dividends have made up some 60% of the total returns.

When you look at growth, the company has done better in the last 10 year period than in the last 5 year period. Revenue per share is up 1.6% and 6% per year. Cash flow is down almost 3.5% per year over the past 5 years, but it is up 10% per year over the past 10 years. Book Value is up 2.7% and 10% per year over the past 5 and 10 years respectively.

The debt ratios are fine for an insurance company. The current Liquidity Ratio 1.25. This is not great, but the Debt Ratio is more important. The Debt Ratio is 1.10, which is ok but not great. It is lower than the 5 year median ratio of 1.18. Both the current Leverage and Debt/Equity Ratio are a bit high at 21.94 and 19.96 and these are higher than the company’s 5 year median of 12.91 and 11.12.

The Return on Equity is quite good for 2011 at 15%. The 5 year median ROE is 14.2%. The ROE basic on comprehensive income attributable to common shares is 14.5%. This ROE has a 5 year ratio of 10.6%.

Currently this stock is 5% of my portfolio. My portfolio is heavily into financials. I will hold on to the shares I have. I expect that this stock will fully recover as other insurance companies will.

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.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, May 8, 2012

Ag Growth International 2

I own this stock (TSX-AFN). I first bought this stock in October 2011 and then some more in December 2011. The stock has gone up 17% since I bought it. Some 8.8% of my total return is in dividends. This stock used to be an Income Trust company.

When I look at insider selling, I find some $5.9M of insider selling. There is a bit of insider buying, with a net selling of $5.4M. However, some $4.7M of the selling is from the estate of an officer. This leaves only some $0.7M selling from current insiders with some $0.5M of insider buying. This isn’t much action and so tells us little.

There are 36 institutions that own almost 40% of this company. Over the past 3 months they have increased their shares by 11.7%. This shows a vote of confidence in this stock. However, over the past 3 months sellers outnumbered buyers by 1, with 6 sellers and 5 buyers.

I get 5 year median low and high Price/Earnings Ratios of 11.69 and 22.90. The current P/E Ratio of 16.11 is almost to the median P/E Ratio. This shows a reasonable price.

I get a current Graham Price of $41.09. The 10 year low median difference between the Graham price and stock price is the stock price being some 25% lower than the Graham price. The median and high difference between the Graham price and stock price is the stock price being 10% and 48% higher, respectively. The current difference between the Graham price and stock price is the stock price being 36% higher than the Graham price. This shows a rather high stock price.

The stock price has been increasing faster than the Graham price. This is because the stock price has been increasing faster than both the earnings and book value.

The 10 year median Price/Book Value Ratio is 2.07. The current P/B Ratio is 2.95. So the current P/B Ratio is some 25% higher than the 10 year median and would suggest a rather high stock price.

The 5 year median dividend yield is 6.79% and the current dividend yield is 5.84%. The current dividend yield is some 14% above the 5 year median and would suggest a rather high stock price. The 10 year low dividend yield is 5.48%, which is 6% lower than the current dividend yield. So the stock price has been relatively higher before.

The testing results for the current stock price are mixed. The test results generally suggest a rather high stock price, but not as relatively high as it has been in the past.

When I look at analysts’ recommendations I find Strong Buy, Buy, Hold, Underperform and Sell. Most the recommendations are a Hold and the consensus recommendation would be a Hold. One analyst says that high yield stocks, such as Ag Growth tend to perform better in regards to capital gain than lower yield dividend stocks. They still rated this stock as a Hold as they do not expect the stock price to go up in the next 12 months.

A Buy recommendation came with the comment that the dividend yield is very good on this stock. Buy recommendations seem to suggest that stock price will be higher in 12 months times. BMO recently rated this stock a” market perform”, which is another term for Hold. See afn.htm. (See my site for information on analyst ratings.)

The median Price Target in 12 months is $40.60. Yesterday, when I started this review, the 12 month price and the current price were basically the same. However, this stock has being falling in the latest downturn of stock market today and now the stock price is below the 12 month stock price. Still, most Hold recommendations seem to be because no one expects the stock price to do much within the next 12 months.

Part of an interesting article from the G&M on AG Growth. There is also a Proactive Investors article about AG returning to profitability in the four quarter of 2011.

I am holding on to the shares I currently have. I have done well so far and expect to get a decent long term gain on this stock, both in terms of dividends and capital gain.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.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, May 7, 2012

Ag Growth International

I own this stock (TSX-AFN). I first bought this stock in October 2011 and then some more in December 2011. The stock has gone up 17% since I bought it. Some 8.8% of my total return is in dividends. This stock used to be an Income Trust company.

This company is one of the few old Income Trusts not to reduce their dividends on conversion to a corporation. They also increased their dividends at the end of 2010 some 17.6%. There was no dividend increase for 2011. The Dividend Payout Ratios are a bit high with 5 year median ratios at 123% and 63% for earnings and cash flow. The DPR for earnings is expected to be lower in 2012 at 94%.

The company has done well in increasing dividends. The company only went public in 2004, but for the last 5 and 7 years the growth in dividends is 9.3% and 17.4% per year. As an Income Trust, the dividend yield was high and the company has a 5 year dividend yield of 6.8%. However, the current yield is lower at 5.8%. It has been expected that old Income Trust company’s dividend yields will decline to a 4 to 5% range.

The total return for this company is good, with the return at 30% and 27.8% per year over the past 5 and 7 years. Of this growth, dividends would account for 9.9% and 10% per year. Capital gain would be 20.1% and 17.8% per year. Dividend composed 33% and 36.6% of the total return over the past 5 and 7 years.

Going forward, the dividend yield will be lower and over the long term will probably be closer to 4 to 5% of the total return. How much this stock will grow in capital gains is anyone’s guess. Personally, I would expect it to be at least around 8% per year. However, most analysts currently do not see the stock going up much more within the next 12 months.

Growth is mainly quite good for this company. The 5 and 10 year growth in revenue per share is 27% and 15% per year. The increase in EPS is lower with 5 and 7 year growth at 2.8% and 7% per year, respectively. Growth in cash flow is good with 5 and 7 year growth at 10% and 17.5% per year, respectively.

And growth in book value is fine with 5 and 7 year growth at 9.7% and 7.9% per year, respectively. However, the new account rules seem to have a big effect on the book value and if the accounts were under the new rules for 2010, the book value would be slightly lower in 2011 rather than 22% higher.

Debt ratios are quite good with the current Liquidity Ratio at a very good 3.16 and the current Debt Ratio at a quite good 2.05. The Liquidity ratio is better than the 5 year median ratio of 2.57 and the Debt Ratio is equal to the 5 year median ratio of 2.05. The current Leverage and Debt/Equity Ratios are also good at 2.00 and 0.98. These last two are higher than, and therefore not as good as the 5 year median ratios of 1.68 and 0.68.

The last thing to talk about is the Return on Equity. The ratio is quite good with the ROE for 2011 being at 12.4% and the 5 year median ROE being at 17.3%. The ROE based on the comprehensive income is even higher at 15% for 2011 and 15% for the 5 year median value. The high ROE based on comprehensive income tends to say that the net income is of good quality.

I will hold on to the shares I have. Buying this stock was part of my plan to get into riskier dividend paying stocks because I wanted to diversity my portfolio. Unfortunately, moving away from financials and utilities stocks mean you will take on more risks. Also, these stocks tend to be more volatile and are hit harder in bear markets. However, over the long term I expect to do just fine with them.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.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, May 4, 2012

Davis & Henderson Corp 2

I own this stock (TSX-DH). I first bought this stock in2009 and then bought more in 2010 and 2011. I have made a total return of 15.9%. Of this total return, 10.3% is attributable to dividends and 5.6% to Capital Gains. Dividends make up almost 75% of my return.

When I look at insider trading, I find a minor amount of insider buying of $1.1M. Buy was by CEO and directors. It looks like insider have recently been retaining their options, and this is a good sign. Everyone but directors have more options than shares.

There are some 36 institutions that own 27% of the shares of this company. Over the past 3 months, they have decreased their investments in this company by almost 25%. However, institutions seem to be buying shares over the last few days.

I have 5 year median Price/Earnings Ratios of 8.03 and 11.92. The current P/E Ratio of 10.7 is showing a relatively high stock price. These are rather low P/E ratios, but this stock used to be an income trust paying out most of its income.

I get a Graham price of $22.09. The 10 year low and median difference between the Graham Price and stock price is the stock price being 26% and 10% lower than the Graham Price. The 10 year high difference is the stock price being 6% higher than the Graham Price. The current stock price of $19.42 is 12% lower than the Graham Price and shows a reasonable stock price.

The 10 year median Price/Book Ratio is 1.75. The current P/B Ratio of 2.19 is some 25% higher and shows a relatively high stock price. The problem with Income Trust companies was that they did not grow their book value because they paid out too much in dividends.

The current dividend yield of 6.39% is some 36% higher than the 5 year median dividend yield of 9.93%. Of course, the dividend has been cut when this company was no longer an income trust. You would expect the dividend yield to be lower.

The thing with companies that change from Income Trusts to Corporation is that you expect the dividends yield to go lower and the P/E ratio to go higher. This does not help in trying to test whether or not a stock price is reasonable. Here we get mixed results. However, the price is not unreasonable. Also, the stock price is lower than the relatively median stock price in 2011 when the change from Income Trust to Corporation took place.

When I look at analysts’ recommendations, I get Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The consensus buy comes with a 12 months price target is $20.40. One analyst likes the good dividend yield and feels it is safe.

One analyst mentions that their main business is printing cheques, which is a slowly eroding business. The company is trying to replace this business. The company just bought Avista Solutions, a company that is a leading provider of mortgage loan origination software to community banks and credit unions in the United States.

This stock is mentioned in a number Cruncher article in February 2012. See G&M.

I will hold on to the shares I have now. These shares form only 1% of my portfolio. I believe that this company has a future. I would expect over the longer term the dividend yield will go lower to between 4 and 5% and that it will have modest capital gains of 3 to 4%. This suggests a 7% to 9% total return. The consensus price of $20.40 suggests a 12 month total return of 11%.

Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson. See my spreadsheet at dh.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.