Contrans Group Inc.

I do not own this stock of Contrans Group Inc. (TSX-CSS, OTC-CTFIF). I got this stock off an article in the Globe and Mail called "15 dividend stocks where payouts are expected to grow". This number cruncher article dated in February 2013 was looking for companies with earnings growth over the last 12 months and a decent Dividend Payout Ratio. (You may not be able to access this article beyond the pay wall.)

This Company used to be an income trust of Contrans Income Fund in 2008 and converted to a corporation in 2009. Dividends were cut some 74.4% between 2008 and 2010. Dividends were flat when it was an income trust, but since changing to a corporation, they have been increasing their dividends. The last dividend increase was for 20% in 2014.

Dividend payments are down over the past 5 and 10 years, but this does not reflect on the current dividend policy. The dividend has a very good yield at 4.07%. The median dividend increase over the past 4 years is at 18.75%.

As the article I read pointed out, the Dividend Payout Ratios are good. The DPR for EPS was at 55% for 2013 and has a 5 year median of 67%. However, this DPR for EPS has been trending lower over the past 5 years. The DPR for CFPS was 26% for 2013 and has a 5 year median of 31%.

The 5 and 10 year total return on this stock is at 20.75% and 6.73% per year. The portion of this return attributable to dividends was 4.69% and 6.24% per year. The portion of this return attributable to capital gains was 16.06% and 0.49% per year. In the future, dividends should be a lower portion of the total return, but there is reason to think that capital gains portion of the return will increase. That is because capital gains tend to match dividend increases for dividend growth stocks.

The company has two classes of shares, Class A shares with one vote each (these are sold on the TSX) and Class B with 10 votes each. Class B shares are owned by insiders. The total outstanding shares have increased by 2.7% and 3.6% per year over the past 5 and 10 years. Shares have increased due to Share Issues and have decreased due to Buy Backs.

Revenue, earnings and cash flow growth over the past 5 and 10 years has not been great, but the company was hit hard by the 2008 recession. Revenue, earnings and cash flow has been growing over the past 3 years up to 2013. Because outstanding shares have been growing, per share values are important.

Revenue has grown at 3.2% and 6.9% per year over the past 5 and 10 years. Revenue per Share has been flat over the past 5 years and has grown at 3.6% per year over the past 10 years. EPS is down by 3.2% per year over the past 5 years and up by 1.4% over the past 10 years. . Cash Flow per Share has been flat over the past 5 years and has grown at 3.5% per year over the past 10 years.

The Return on Equity has only been below 10% 1 year in the past 10 years and that was in 2010. The ROE for 2013 was 14.8% and the 5 year median is 14.8%. There is no difference between the net income and the comprehensive income for this company. This could point to the earnings being of good quality.

The Liquidity Ratio for 2013 is a little low at 1.04. If you add in cash flow after dividends the ratio becomes 1.67. The Debt Ratio is quite good at 2.05. The Leverage and Debt/Equity Ratios are also quite good at 1.95 and 0.95.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. The dividend yield and the dividend growth is currently quite good. See my spreadsheet at css.htm.

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

Contrans Group Inc. is engaged in freight transportation. It provides freight transportation services to shippers located in Canada, as well as in the eastern, mid-western and southern United States. Its web site is here Contrans.

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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