I do not own shares in this company (TSX-GS). I started to follow this company after I read an article by Jennifer Dowty in 2010 about stocks that pay not only dividends, but special dividends too. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer currently works for Manulife.
Let's start with dividends on this stock. They have been giving out regular quarterly dividends, plus a special dividend each year. The special dividend given out in October 2012 was lower it has ever been at $0.06 per shares. (Special dividend was $0.80 for the past 2 years.) Last year was not a good year for this stock. The Dividend Payout Ratios were high for earnings at 237%. (Earnings hit a low for the financial year ending in June 2012.)
The DPRs for earnings is expected to be lower this year at 65.5%. The DPRs for cash flow was also high for the financial year ending in June 2012. The 5 year median DPRs are 102% and 85.5% for earnings and cash flow, respectively. The DPR for earnings has been often over 100%.
This stock has only been public since 2006 and so I do not have much data to judge this company. They started dividends in 2007. Dividends have been quite strong for this company with the 5 year dividend growth at 15%. The most recent dividend increases was for 7.7%.
The total return is down by 6.79% per year over the past 5 years and up by 0.8% over the past 7 years. The portion of the total return attributable to dividends would be 5.95% and 5.48% per year over the past 5 and 7 years. Capital loss would be 12.73% and 4.68% per year over the past 5 and 7 years.
The growth on this stock really peaked in 2006 and 2007 and then went downhill to the end of financial year of June 2012. Analysts expect this company to have a much better year with the financial year ending in June 2013.
The company issued shares in 2005 and 2006. Since then the shares outstanding have gone down marginally per year. Revenue decline per year over the past 5 year is 14.63% per year and Revenue per Share decline is at 14.43% per year.
Some analyst gave different EPS for the financial year ending in June 2012 to compensate for unusual expenses. This is not consistent over sites with some giving an EPS of $0.68 and some $0.75. (It depends on what different analysts think is usual.) However, both these adjusted EPS are still down from EPS for year ending June 2010 of $1.69. Over the past 5 years EPS has decline by 25% per year. Cash Flow over the past 5 years has decline by 19.6% per year. However, book value per share over the past 5 year has remained flat.
The Return on Equity on this stock is outstanding with the ROE for the financial year ending in June 2012 at 23.7% and with a 5 year median ROE of 43.8%. The ROE based on comprehensive income is the same.
All the debt ratios are quite good, which is what to expect when insiders own a significant portion of the outstanding shares. The current Liquidity Ratio is 3.85. The current Debt Ratio is 3.47. The Current Leverage and Debt/Equity Ratios are 1.40 and 0.40.
It is hard to know if this stock has turned the corner and will actually do better this year. Analysts seem to think that starting in the 2nd quarter of this year, which ends December 2012, earnings and revenue will pick up. They have not done so yet, so I would be cautious. Analysts estimates are just that, estimates and they can be very wrong.
The dividend is good at 4.75%, but will they start to earn money again?
Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin Sheff. See my spreadsheet at gs.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.
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