IGM Financial Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Financial Service Stock. It has not raised their dividends much over the last little while, but I would expect that dividend increases will be in the future for this company. See my spreadsheet at igm.htm.

I do not own this stock of IGM Financial Inc. (TSX-IGM, OTC- IGIFF), but I used to. I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by and I wanted to rationalize my portfolio. So I sold this stock and bought more of Power Financial.

This is a dividend growth stock, but it has not always raised its dividends every year. A lot of financial companies have had problems with the last recession. Recently dividends were not raised in 2010, 2013 and 2014. The last dividend increase was in 2015 for 4.65%. The dividend growth over the past 5 and 10 years is at 1% and 6.5% per year. The dividend increases were much higher in the past. For the 10 years to 2008, the dividend growth was 15.1% per year.

On the other side of the coin, the Dividend Payout Ratios for EPS have been much higher recently. The 5 year median DPRs for ESP to 2014 was 71.9%, but the 5 year median DPRs for EPS prior to 2008 was 52.9%. The DPRs for EPS hit a peak in 2009 at 96.7%. The DPRs for EPS for 2014 was 72.1% and is expected to be around 67% for 2015. As earnings grow they will be able to increase dividends.

Currently the dividend is quite good, but the growth is low. The dividend yield used to be lower with a higher growth. The current dividend yield is 5.4% with 5 and 10 years growth at 1% and 6.5%. The 5 year median dividend yield is 4.6%. The historical median dividend is 3.3%. I would expect in the future that dividend yield will go lower and the dividend growth will go higher.

The total return over the past 5 and 10 years was at 4.06% and 3.69% per year. The portion of this total return attributable to dividends was 5.06% and 4.60% per year. The portion of this total return attributable to capital loss was at 1.005 and 0.90% per year. This stock used to do much better at total returns, and I expect it to do better in the future, but it has been a long slow recovery for financial stocks.

The outstanding shares have not changed much over the past 5 and 10 years. The change in outstanding shares is less than 1% per year. The shares increased due to Stock Options and have decreased due to Buy Backs. The growth in Assets under Management (AUM), Revenue and Cash Flow has been moderate. The Growth in EPS has been moderate to low.

AUM has grown at 3.3% and 5.1% per year over the past 5 and 10 years. Revenue has grown at 4.8% and 3.3% per year over the past 5 and 10 years. Revenue per Share has grown at 5.7% and 3.8% per year over the past 5 and 10 years. Analysts expect moderate growth at 6.2% for 2015. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Revenue has grown at 1.57% and AUM has grown at 7.8%.

EPS has grown at 7.1% and 2.9% per year over the past 5 and 10 years. Analysts expect good growth in EPS for 2015 at 12.4%. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, EPS has grown at only 1 %. With such a low growth in the first quarter, you have to wonder about the 2015 estimates.

The Cash Flow has grown at 4.5% and 3.1% per year over the past 5 and 10 years. CFPS has grown at 5.4% and 3.6% per year over the past 5 and 10 years. Analysts expect growth in CFPS at around 25% in 2015. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Cash Flow has grown at 0.3%. Here again, with such low growth in the first quarter, you have to wonder about the 2015 estimates.

Return on Equity has always been good, that is above 10%. The ROE for 2014 is 16.1% and it has a 5 year median of 16.7%. The ROE on comprehensive income is slightly lower for 2014 is 15.7% and it 5 year median is 16.8%. I see no problems here.

Liquidity Ratios are not very important in financial companies. The Debt Ratio has been good with the one for 2014 at 1.51 and the 5 year median at 1.59. The Leverage and Debt/Equity Ratios are fine at 2.98 and 1.98. I see no problem with debt ratios.

This is the first of two parts. The second part will be posted on Monday, June 22, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This is a mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM 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.

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