Wednesday, October 23, 2013

IGM Financial Inc

On my other blog I am today writing about Diane Francis' idea that we should merge with the US...continue...

I do not own this stock IGM Financial Inc. (TSX-IGM, OTC-IGIFF). I am following this stock because I used to own this stock. The stock was on Mike Higgs' list of dividend growth stocks and on the other Dividend t lists at that time.

I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by, and I want to rationalize my portfolio. So I sold this stock and bought more of Power Financial.

A lot of financial companies had a hard time because of the 2008 recession. This company is no different. There was no dividend increase in 2009 and 2010. The dividends were raised by just 4.9% in 2011. There was no increase in 2012 and none so far in 2013.

Over the past 5 and 10 years this company has dividend growth of 3.9% and 10.6% per year. Before 2008, the median dividend increase was around 17% per year.

The Dividend Payout Ratios are also currently higher than they used to be. The 5 year median DPR for earnings is at 73% and for cash flow at 65%. Prior to 2008, the DPR for earnings was at 50% and the DPR for cash flow at 48%. My 2014, analysts expect the DPRs to move slightly down to 64% and 52% for earnings and cash flow. Some analysts think that the company may modestly increase the dividends in 2014.

The total return to date on this stock is 12.17% and 9.44% per year over the past 5 and 10 years. The dividend portion of this return was 5.22% and 4.66% per year over these periods. The capital gain portion of this return is 6.95% and 4.78% per year over these periods. The stock had not done as well to the end of 2012 where the total return was just 0.82% per year over the past 5 years and 9.94% per year over the past 10 years.

The outstanding shares are not changed much over the past 5 and 10 years and are lower by less than 1% per year over these periods. There these periods, the shares were increased due to stock options and decreased due to buy backs.

Using 5 year running averages, revenues per share have increased by 2.3% and 5.6% per year over the past 5 and 10 years. Using 5 year running averages, earnings per share have increased by 1.6% and 8% per year over the past 5 and 10 years. Also using 5 year running averages, cash flow per share has increased 3.6% and 8.5% per year. The 10 year increases are good, but the 5 year increases are low.

The Return on Equity has been good over the past few years. The ROE for 2012 was 17.3% and the 5 year median was also 17.3%. The ROE on comprehensive income was fairly close at 16% which is just 7.5% off.

The Liquidity Ratios has always been quite good and was at 2.18 for the 2012 financial year. This ratio is not as important on financial companies. The Debt Ratio is also good at 1.59. Leverage and Debt/Equity Ratios are fine at 2.73 and 1.73 currently. See my spreadsheet at igm.htm.

This is the first of two parts. Second part will be posted on Monday, October 28, 2013 and will be available here.

This is a premier mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM Financial.

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 or StockTwits.

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