Home Capital Group

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I do not own this stock of Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend paying company and was coming up on lists of good dividend paying stocks. It is on some dividend paying companies lists that I look at.

The dividend yield is rather low with the 5 year median dividend yield at 1.59% and the current dividend yield at 1.50%. The dividend increases are good with the 5 and 10 year growth at 16.7% and 33.5% per year respectively. Dividend increases where large until 2008, when they slowed to around 14% to 20% per year.

The most recent increase was for 2014 and it was for 14.3%. This company often gives more than one increase in a year. Dividends between 2013 have grown by 18.5%. Increases have not been consistent and since they started to pay dividends in 2002, there was one year of no increases.

The Dividend Payout Ratios are good with the DPR for EPS at 14% and the CFPS at 14% also. The DPR for EPS for 2013 was at 15% and the CFPS was at 7%. For 2014 both these DPRs are expected to be around 15%.

The total return over the past 5 and 10 years has been at 16.88% and 11.47% per year with 1.64% and 1.19% per year from dividends and $15.24% and 10.27% per year from capital gains.

Outstanding shares have basically not changed over the past 5 and 10 years. The shares have increased due to stock options and decreased due to buy backs. Revenue, earnings and cash flow has grown well over the past 5 and 10 years.

Revenue per Share has grown at 9.6% and 17.06% per year over the past 5 and 10 years. If you look at 5 year running averages, especially over the past 5 years, the growth is better with growth at 12.4% and 18.9% per year. This is because growth in revenue is slowing.

The growth in earnings is also quite good with 5 and 10 years growth at 18.5% and 23.9% per year. Cash Flow growth is good with CFPS growth at 41.4% and 29.4% per year over the past 5 and 10 years. The 5 year running averages growth is not as good as there has been good growth over the past while, especially over the past 5 year. The growth using 5 year running averages is at 27% and 26% per year over the past 5 and 10 years.

The Return on Equity has been over 10% since 1998 and over 20% since 2002. This is a good showing. The ROE for 2013 is 21.8% with a 5 year median of 23.4%. The ROE on comprehensive income is close with the ROE at 20.5% for 2013 and with a 5 year median of 23.5%.

The Liquidity Ratio is very good at 4.56 for 2013. The debt ratios are typical of financials coming in at 1.06. The Leverage and Debt/Equity Ratios are typical of financials at 17.05 and 16.05.

This has been a solid financial stock for its shareholders and the company has seen solid growth. Analysts seem to expect slower growth for 2014, but better growth in 2015. The dividend yield is on the low side, but the dividend increases are good. See my spreadsheet at hcg.htm.

This is the first of two parts. The second part will be posted on Thursday, February 27, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages. Its stock is widely held. Its web site is here Home Capital.

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. I do research for my own edification. I write what I think and I may or may not be correct.

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