Saputo Inc

On my comment blog today, I am talking about the place companies I follow have their Head Office. See comments blog.

I own this stock (TSX-SAP). I first bought this stock in 2006 and then some more, twice in 2007. To the end of May 2012, I have a return of 17.5%, with 2.24% coming from dividends and 15.26% coming from capital gain. Some 12.8% of my return is from dividends.

This is a stock with a rather low dividend. The 5 year median dividend yield is just 1.8%. Dividend growth over the past 5 and 10 years is 13.4% and 33.8% per year. Increases have been fairly low since 2006, although last year’s increase was quite good at 18.8%.

Since the last financial year ended on March 2012, there has been no dividend increase. Usually, it is the July dividend that shows the increase, but they have announced July dividend at old rate. The analysts’ consensus on dividends is that they will be no increase until the financial year ending March 2014. They expect the next increase to be around 18%. If this is true, this would be the first time since 2001 that Saputo has not done had an annual dividend raise.

The Dividend Payout Ratio is and has always been quite good. The 5 year DPR for earnings is 33% and for cash flow is 34%. The ones for the financial year ending March 2012 were 39% and 28%, respectively. This sort of company would have a low dividend yield and low DPRs because it would need money for expansion. It would be considered a dividend growth company.

The total return under this stock over the past 5 and 10 years is at 14.8% and 11.92% per year. The dividend portion of this return is 1.97% and 1.66% per year, respectively. That is dividends made up 13.33% and 13.96% per year of the total return. The capital gain portion of the total return was 12.82% and 10.26% per year, respectively.

Growth has mostly been good for this stock. The 5 and 10 year growth in revenue per share is 7.6% and 12.5% per year, respectively. Growth in EPS is 9% and 10% per year, respectively. Growth in cash flow is 9.7% and 13.7% per year, respectively. Growth in book value is 7% and 9% per year, respectively.

Debt ratios are good to very good. The current Liquidity Ratio is 1.55. The current Debt Ratio is very good at 2.41. Both the current Leverage and Debt/Equity Ratios are quite good at 1.71 and 0.71, respectively.

The last thing to talk about is the Return on Equity. The ROE for the financial year ending in March 2012 is 18.1% and just above the good range of 10 to 15%. The 5 year median ROE is at the same place at 18.1%. The ROE based on comprehensive income confirms the very good ROE coming in at 18.6% for the financial year ending March 2012. It has a 5 year median ratio of 18.6%.

I am pleased with my investment in the company and will currently hold on to my shares. I will not be buying any more as they compose just over 6% of my portfolio.

Saputo produces, markets, and distributes a wide array of products of the utmost quality, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the twelfth largest dairy processor in the world, the largest in Canada, the third largest in Argentina and among the top three cheese producers in the United States. Our products are sold in more than 50 countries under well-known brand names. Its web site is here Saputo. See my spreadsheet at sap.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.