Sound bite for Twitter and StockTwits is: Dividend Growth Financial Service stock. It is a good sign that this company has reinstated dividend increases. With the earnings increasing it would seem that they can now afford dividend increases. See my spreadsheet at pow.htm.
I do not own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs' list. I would not buy it because I have shares in Power Financial, which this company controls.
As with other stocks in financial services, they stopped increasing their dividends in 2008. They have a good record of dividend increases since 1994 to 2008. The growth in dividends over the past 5 and 10 years is at 1.1% and 7.7% per year. For the 10 years prior to 2008, dividend growth was at 17.6% per year.
The current dividend yield is good at 3.8%. The 5 year median dividend yield is good at 4.14%. Prior to 2008, when dividends where being increased the dividend yields were lower. The 10 year median dividend yield to 2008 was at 2.1%.
The last dividend increase was 7.3% and the increase occurred in 2015. If they continue with this sort of increases, in 10 years' and 15 years' time your dividend yield could be 7.8% and 11% on today's stock price of $32.43.
If you had bought this stock 5, 10, 15 or 20 years ago at a median price, the dividends paid to date would cover 21%, 35%, 95% and 289% of the cost of your stock at the time of purchase. If you had bought this stock 5, 10, 15 or 20 years ago at a median price your dividend yield would be 4.4%, 4%, 8.7% and 24% on your original cost of your stock.
This stock's price also peaked around 2008 and then fell some 62% in 2009. It is still some 18% off the peak in 2008. The 5 and 10 year total return is 7.21% and 3.64% per year with 3.23% and 0.24% per year attributable to capital gains and 3.99% and 3.40% per year attributable to dividends. Not a great showing, but a lot of stocks are still having problems.
The outstanding shares increased at a very low rate (under 1% per year) over the past 5 and 10 years. Shares have increased due to stock options. Revenues are up moderately. Earnings growth is moderate to good. Cash Flow growth is low to moderate.
Revenue is up by 5.2% and 5.7% per year over the past 5 and 10 years. Revenue per Share is up by 5% and 5.4% per year over the past 5 and 10 years. Analysts expect good growth in revenue in 2015. They expect revenue to grow by almost 20% this year. If you look at the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Revenue has grown at 6.7%.
EPS is up by 14.5% and 3.1% per year over the past 5 and 10 years. Analysts expect good growth in EPS at around 12% this year. If you look at the 12 months to the end of 2014 and the 12 months to the end of the first quarter, EPS has grown at 8.7%.
Cash Flow has grown at 1.8% and 5.5% per year over the past 5 and 10 years. CFPS has grown at 1.6% and 5.1% per year over the past 5 and 10 years. There are no Analysts estimates for cash flow for 2015.
The Return on Equity in 2014 was 11.6% and the 5 year median ROE is 11.6%. The ROE on comprehensive income is somewhat better at 13.7% with a 5 year median ROE at 13.6%. When the ROE on comprehensive income is similar to that of net income it suggests that earnings are of a good quality.
The Liquidity Ratio has generally been good for this stock and the one I calculate for 2015 is 1.55. This is not considered to be an important ratio for financial stocks. The Debt Ratio is good for a financial stock at 1.09. The Leverage and Debt/Equity Ratios at 31.53 and 28.90 are even rather high for a financial stock.
This is the first of two parts. The second part will be posted on Wednesday, June 24, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.
Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. Some of it subsidiary companies include Power Financial, the Pargesa group and Gesca and Square Victoria Digital Properties. Its web site is here Power Corp.
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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