Gluskin Sheff + Associates Inc.

On my other blog I am today writing about comparing the effect on dividends of original purchase price learn more...

Sound bite for Twitter and StockTwits is: Financial Service Dividend Growth Stock. This is a relatively small company with a current Market Cap of around $721M. They also give out special dividends each year. See my spreadsheet on Gluskin Sheff + Associates Inc.

I do not own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. I did a spreadsheet on this stock in February 2010. I chose this stock because I recognized the names of Gluskin and Sheff. Their financial year ends June 30 each year.

This company pays a special dividend every year. I do not know of another company that does this. This special dividend is often more than the regular dividends. The company decides each year how much to pay in special dividends. It can make a big difference sometimes. In 2014 the total dividend yield was 11.2% compared to the regular dividend yield 2.4%. It was less of difference in 2015 when total dividend yield was 4.9% compared to 3.5%.

The other difference you see is in the original stock price coverage after 5 and 10 years. To date total dividends have covered 43.5% and 79.7% of the original stock price after 5 and 10 years. To date regular dividends have covered 23.8% and 43.3% of the original stock price after 5 and 10 years.

The regular dividends are good with moderate dividend growth. The current dividend is 3.95% and the 5 and 10 years dividend growth is 12.1% and 14% per year. The last dividend increase was this year and the increase was for 12.5%.

They are paying out a good percentage of their earnings and cash flow. The Dividend Payout Ratio covering total dividends in 2015 was 73.8% for EPS and was 55.6% for CFPS. The 5 year median DPR for EPS is 84.2% and for CFPS is 72.4%.

Shareholders have done fine over the past 5 and 10 years in total returns. However, most of the returns are in dividends. The total return to date over the past 5 and 10 years is at 9.84% and 8.36% per year. The portion of this total return attributable to dividends is at 8.02% and 6.26% per year. The portion of this total return attributable to capital gains is at 1.83% and 2.09% per year.

Outstanding shares have increased by 1.6% and 0.9% per year over the past 5 and 10 years. Assets under Management have grown well. Revenue growth is low to moderate. EPS has grown moderately over the past 5 years. Cash Flow growth is moderate to good.

Assets under Management have grown at 9% and 14.1% per year over the past 5 and 10 years. Revenue has grown at 5.9% and 2.9% per year over the past 5 and 10 years. Revenue per share has grown at 4.3% per year over the past 5. The 10 year growth in Revenue per Share is probably not a true reflection of its growth. Analysts expect low growth for 2016 and better growth in 2017.

Net Income has grown at 6.4% and 27.13% per year over the past 5 and 10 years. EPS has grown at 5% per year over the past 5 years. The 10 year growth in EPS is probably not a true reflection of its growth. Analysts expect low growth in EPS for 2016 and better growth in 2017.

Cash Flow has grown at 7.1% and 10.4% over the past 5 and 10 years. CFPS has grown at 5.3% over the past 5 years. The 10 year growth in CFPS is probably not a true reflection of its growth.

The Return on Equity has always been quite high on this stock. The ROE for the 2015 financial year is 41.9% and 5 year median is 50.7%. The ROE on Comprehensive Income is similar at 41.5% and a 5 year median at 50.7%. Sometimes high ROE are not good and ROEs can be high when debt levels are high. However, this is not the case here as debt levels are relatively low.

The debt ratios are quite good. The Liquidity Ratio is 1.86 and the Debt Ratio is 3.23 in 2015. The Leverage and Debt/Equity Ratios are 1.45 and 0.45.

This is the first of two parts. The second part will be posted on Thursday, October 29, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin Sheff + Associates Inc.

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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