Toromont Industries Ltd.

On my other blog I am today writing about what is in my portfolio continue...

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.

This stock is a dividend growth stock with a moderate dividend and generally good dividend growth. The dividend was cut in 2011 to account for the dividend that went with the Enerflex spin off. So this was not really a dividend cut.

The 10 year dividend growth, which includes the cut in 2008, is at 9.3% per year. This does really reflect the increases under this stock. In 2013, dividends were raised by 8.3% and for 2014 dividends are already up by 15.4%. The median dividend increase over the past 10 years is at 12.6%. So it comes down to decent dividend and decent growth.

The Dividend Payout Ratio are good on this stock with the 5 year median DPR for EPS at 32% and for CFPS at 22%. The DPR for 2013 is the same at 32% for EPS and 22% for CFPS.

The only way to value this stock's performance is to include the Enerflex (TSX-EFX) spin off. The problem was that this spin off was valued at $12.95 but it was not long before the price fell. I sold these shares at around $10.25 and felt lucky to have done so. I have made a total return of 7.34% per year with 5.46% from capital gains and 1.88% from dividends.

If you substitute what I actually got for my Enerflex stock in calculating total return over the past 5 and 10 years, the total return is at 8.74% and 8.33% per year. This would include a capital loss of 1.44% over the past 5 years and a capital gain of 2.24% per year over the past 10 years. The dividends portion of this return is at 10.18% per and 6.09% per year over the past 5 and 10 years. None of this is a great showing, but it is acceptable.

The higher dividends in these calculations are because the spin-off of Enerflex is considered to be a dividend. The dividends would be closer to what I got on my stock at 1.88%, although total return would be the same as shown above.

Outstanding shares have increased by 3.5% and 1.9% per year over the past 5 and 10 years. I did not exclude Enerflex from revenue, cash flow or earnings. The problem is that Enerflex was just purchased in 2010 and then sold in 2011. It did affect these values in these two years, but not the values before or after.

The 10 year values for Revenue, Earnings and Cash Flow growth is better than that for the last 5 years. Also, exactly 5 and 10 years ago were good years for this company, so the 5 year running averages over the past 5 and 10 years are better than the values for the past 5 and 10 years. Also there has been growth over the past couple of years.

Revenue per Share is down by 8.8% per year over the past 5 years. Revenues per Share are flat for the past 10 years. If you look at 5 year running averages, the Revenue per Share is down just 3.3% per year over the past 5 years and is up by 4% per year over the past 10 years. Revenue per share has grown over the past couple of years.

EPS is down by 5.9% per year over the past 5 years and up by 5.7% per year per the past 10 years. If you look at 5 year running averages, the EPS is down less than 1% per year over the past 5 years and is up by 8.7% per year over the past 10 years. EPS has grown over the past couple of years.

CFPS is down by 3% and up by 4.9% per year over the past 5 and 10 years. If you look at 5 year running averages, CFPS is down by less than 1% per year over the past 5 years is up by 7.5% per year over the past 10 years. CFPS is up by almost 10% between 2012 and 2013.

Over the past 10 years, Return on Equity was lower than 10% for only one year and that year was 2010. The ROE for 2013 was 21.3% and the 5 year median ROE is at 21.3%. The ROE on comprehensive income is similar with an ROE for 2013 at 22.8% and with a 5 year median at 22.8%.

The debt ratios for this stock are very good. The Liquidity Ratio is 2.18. The Debt Ratio is 2.27 and the Leverage and Debt/Equity Ratios are at 1.79 and 0.79. This company has a strong balance sheet.

I like the strong balance sheet for this industrial stock. I think that there will be good dividend increases in the future. To me it is still a dividend growth stock. However, their purchase and spin off of Enerflex seems to make little sense. This stock has good Dividend Payout Ratios. See my spreadsheet at tih.htm.

This is the first of two parts. The second part will be posted on Tuesday, April 15, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Its web site is here Toromont Industries.

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 and I am willing to share. I write what I think and I may or may not be correct.

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