Thursday, January 1, 2015

Stella-Jones Inc.

This entry should have been on blogger on December 19, 2014. For reason it was not published.

I do not own this stock of Stella-Jones Inc. (TSX-SJ, OTC-STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.

The dividend is low but the growth is very good. The current dividend is just 0.81% and the 5 and 10 years dividend growth is at 18.7% and 25.9% per year over the past 5 and 10 years. Personally, I would not like to buy any stock with a dividend yield less than 1%. However, there has been lots of chances in the past to buy this stock at a 1% dividend yield and this sort of dividend yield is be presented again in the future.

At the current dividend yield of 0.81% and at an 18% per year growth, your dividend yield on your original investment if done today would give you a 1.85% yield is 5 years, 4.28% yield after 10 years and 9.68% yield after 15 years. If the current yield is 1%, the yield you would have is 2.29% yield after 5 years, 5.23% yield after 10 years and 11.97% yield after 15 years. One problem is that growth companies can grow their dividends at high rates but mature companies cannot. Eventually, a growth company will become a mature company, so the high growth rates do not last forever.

For this company, the dividend payout ratios are quite low. This goes together with their low dividend yield. The 5 year median DPR for EPS is at 14.9% and for CFPS is at 11.53. The corresponding DPRs for 2013 were for EPS at 14.9% and for CFPS at 10.7%. The corresponding DRPs for 2014 are expected to be for EPS at18.2% and for CFPS at 20.6%.

The last dividend increase for this company was in 2014 and it was a 40% dividend increase. Since they started dividends in 2001, the dividends were raised every year except for the years of 2002 and 2004.

Shareholders have done very well in this stock over the past 5 and 10 years. The total return over these periods is at 40.33% and 37.73% per year. The portion of this total return attributable to dividends is at 1.29% and 1.55% per year. The portion of this total return attributable to capital gain is at 39.04% and 36.18% per year.

Outstanding shares have increased by 6.5% and 5.5% per year over the past 5 and 10 years. Shares have increased due to Share Issues, Stock Options and an Employee Stock Purchase Plan. The growth in revenues, earnings and cash flow has been very good including the growth in per share values.

Revenue has grown at 20% and 26% per year over the past 5 and 10 years. Revenue per Share has grown at 13% and 19% per year. EPS has grown at 19% and 30% per year over the past 5 and 10 years. Cash Flow per Share has grown at 18% and 27% per year over the past 5 and 10 years.

The Return on Equity Ratio has been above 10% each of the past 10 years. The ROE for 2013 is at 16.2% and the 5 year median is 16.2%. The ROE for comprehensive income for 2013 is higher at 20.4%, but the 5 year median value is a bit lower at 14.4%.

The current debt ratios are very good on this stock and generally are very good. The 2013 Liquidity Ratio is 8.97 and this has a 5 year median value of 5.77. The Debt Ratio for 2013 was 2.14 and the 5 year median value is also 2.14. The Leverage and Debt/Equity Ratios for 2013 was 1.87 and 0.87. The 5 year corresponding ratios are 1.87 and 0.87.

Sound bit for Twitter and StockTwits is: relatively small industrial dividend growth company. I have always enjoyed reviewing this company. It seems like a really good stock company to own. However, you cannot own everything. See my spreadsheet at sj.htm.

This is the first of two parts. The second part will be posted on Monday, December 22, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella-Jones.

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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