Computer Modelling Group Ltd

Do you know what the power of a growing dividend is? See comments blog.

I own this stock (TSX-CMG). I first bought this stock in 2008 and some more in 2009. In 2011 I sold half my stock when my stock had doubled in price. This is called locking in a profit. (Basically, the stock I own did not cost me anything.) This is a higher risk tech stock and I have often dealt with risky, fast rising stock in this manner.

I have made a return of 40.9% per year on this stock. The dividend portion of this return is 6.3% per year and the capital gain is 34.6% per year. On my original investment, I am making a dividend of yield of 10.2%. Dividends have increased by 146% since I first bought this stock. The current dividend yield is 3.8%.

The last increase in dividends was an increase of 23%. However, so far this year, dividends for 2012 are up 42% over dividends for 2011. The growth in dividends over the past 5 and 7 years is 44% and 41% per year. Dividends only were started on this stock in 2005.

The 5 year median Dividend Payout Ratios for this stock is 93% for earnings and 79% for cash flow. They are paying a high percentage of earnings and cash flow. If anything happened to earnings and cash flow, then you would expect them to lower the dividends. You should not look on this stock as not having a secure dividend.

The 5 and 10 year total return on this stock is 43% and 222% per year, respectively. The dividends account for 6.3% and 171% of the total return over the past 5 and 10 years. That is dividends account for 15.4% and 77% of the total returns over the past 5 and 10 years. Capital gains were 37% and 51% of the total returns over the past 5 and 10 years. As you can see, dividends make up a large part of the great 10 years returns.

This stock comes up rosy no matter what growth statistics you look at. Revenue per share is up 16% per year over the past 5 and 10 years. EPS is up 24% per year over the past 5 and 10 years. Cash Flow is up 30% and 31% per year over the past 5 and 10 years. Book Value is up 15% and 20% per year over past 5 and 10 years.

The shares outstanding have also been increasing each year. They are up 3.9% and 2.8% per year over the past 5 and 10 years. A lot of the increase, but not all, is due to stock options.

The debt ratios are very good on this stock. The current Liquidity Ratio is 2.53 and the current Debt Ratio is 2.50. The current Leverage and Debt/Equity Ratios are also very good at 1.63 and 0.63.

The last very good thing about this stock is the Return on Equity. The ROE for the financial year ending in March 2012 is 50.8%. The ROE based on the comprehensive income is the same at 50.8%. The 5 year median ROE is 48%.

I am, of course, please with my investment in this company. It is a rather risky investment, so I do keep an eye on this stock. Dividends could go down as well as up.

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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.