Tuesday, June 24, 2014

CI Financial

I do not own this stock of CI Financial (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

This stock has been publicly traded on the Toronto Stock Exchange since June 1994. When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable when it became a corporation, so dividends where decreased. They changed back to a corporation in 2009 and since that time, they have been increasing their dividends.

When they changed to a corporation the dividends fell about 89%. Since then dividends are up some 67%. The most recent increase occurred in 2014 with a dividend rise of 5.3%. If you look at 5 and 10 years grow, dividends are down 12.8% per year over the past 5 years, but are up by 24% per year over the past 10 years. Since dividends started to grow again in 2010, they are up by 36.5% per year.

Over the past 5 and 10 years, total return is at 13.05% and 13.8% per year. The portion of this return attributable to capital gains is at 9.45% and 7.71% per year. The portion of this return attributable to dividends is at 3.60% and 6.08% per year.

Dividend yield was quite low when this company first went public (around 1% and often below 1%). However dividend yield started to climb when it became an income trust company and reached a peak in 2009 when dividends were cut. They are currently around 3.47% with a 5 year median of 4.11%.

The outstanding shares have increased by 0.6% and 1.9% per year over the last 5 and 10 years. Shares have increased due to Stock Options and Share Issues and have decreased due to Buy Backs. Growth in revenue, earnings and cash flow is much better over the past 10 years than over the past 5 years.

Revenue per Share is up by 2% and 7% per year over the past 5 and 10 yeas using the 5 year running averages. Earnings per Share are down by 1.5% and up by 56.55% using the 5 year running averages. The 10 years value is so high because of a loss year in 2002. Earnings per Share is down by 1.2% and up by 17.1% per year over the past 5 and 10 years using values exactly 5 and 10 years old and 2013 values.

Cash Flows per Share are up by 0.7% and 7.2% per year over the past 5 and 10 years. If you use the 5 year running averages, Cash Flows per Share is up by 0.3% and 4% per year over these periods.

Over the past 5 years the Return on Equity has been higher than 10%. The ROE for 2013 is at 23.4% and the 5 year median ROE is at 21%. The ROE on Comprehensive Income is at 23.7% for 2013 and has a 5 year median ROE of 21.1%. (The ROE on Comprehensive Income just points out the earnings should be of good quality.)

The Liquidity Ratio for 2013 is at 0.73 and if you add in cash flow after dividends, this becomes 1.14. If you exclude long term debt due this year, the Liquidity Ratio becomes 1.14 and the ratio would be 2.01 if you add in cash flow after dividends.

The Debt Ratios have always been good and the one for 2013 is at 2.44. The 5 year median Debt Ratio is at 2.15. The Leverage and Debt/Equity Ratios are also quite good at 1.70 and 0.70 for 2013.

This is a Mutual Fund company that is a dividend growth stock. Analysts expect it to do well in 2014. With MPL communications adding it to their portfolio shows confidence in the future of this company. See my spreadsheet at cix.htm.

This is the first of two parts. The second part will be posted on Wednesday, June 25, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI 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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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