Wednesday, April 6, 2016

Manulife Financial Corp.

First of all I am sorry that I forgot to do the updated on stock prices against historical dividend yields. I can only do this report update on the weekends, so I will update my spreadsheet and do these reports next week.

Sound bite for Twitter and StockTwits is: Stock is cheap. I am holding on to the shares I have. I may pick up more when I have some more money to spend. See my spreadsheet on Manulife Financial Corp.

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria. I bought some more stock in October 2005; April 2009; October 2010; April 2013 and January 2016. So far I have not done very well with a total return of negative 1.22% per year with a capital loss of 3.83% per year and dividends of 2.61% per year. But I expect to earn money on this stock long term.

This insurance company also had problems starting in 2008 due to very low interest rates. However, unlike other insurance companies, it cut its dividend in 2009. The dividend cut was a 50% cut. The dividends then remained flat until 2014. Since then dividends are up some 38%. The latest dividend increase was in 2016 and it was for 8.8%. Analysts expect that dividend increases will continue.

The company can current afford their dividends. The Dividend Payout Ratio for EPS was 65% in 2015 and is expected to drop to 32% in 2016. The 5 year median DPR for CFPS is 9.9%. Analysts expect cash flow to drop in 2016 and 2017 so that DPR for CFPS is the 50% range. However, analysts have been way off in CFPS in the past. To date the DPR for CFPS has ranged between 8 and 20% over the past 10 years.

The most notable growth for this company is in 2015 is Assets under Management. This jumped some 35% in 2015. The 5 and 10 years growth in Assets under Management is at 14.5% and 6.7% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.61, 13.74 and 15.86. These are lower than both the 10 year and historical values, but the values are quite similar. The 10 year values are 12.63, 14.75 and 15.88. The historical values are 11.52, 14.34 and 16.27. The current P/E Ratio is 9.80 based on a stock price of $18.04 and 2016 EPS of $1.84. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $28.42. The 10 year low, median and high median Price/Graham Price Ratios are 0.84, 1.03 and 1.30. The current P/GP Ratio is 0.73 based on a stock price of $18.04. This stock price testing suggests that the stock price is relatively cheap.

The current dividend yield is 4.10% based on dividends of $0.74 and a stock price of $18.04. The historical median dividend yield is 2.26% a value some 81.5% lower. The 5 year dividend yield is 3.20%, a value some 28% lower. This stock price testing is suggesting that the stock price is relatively cheap. The historical high relative dividend yield is just over 6%. It is unlikely that it will hit that high again as it did in 2009.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $21.77. This implies a total return of 24.78% with 20.68% from capital gains and 4.10% from dividends. I know some analysts ignore this 12 month consensus price, but it does show where market sentiment lies.

Kay Ng of Motley Fool also thinks this stock is cheap. According to Josh Trexler at Lost Angeles Mirror some Hedge Funds have been buying this stock. Companies include Intact Investment Management, Bridgeway Capital Management Inc. and Caisse De Depot Et Placement Du Quebec. Other Hedge Funds sold some shares. See what other Canadian Analysts are saying about this stock at Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

I wrote yesterday about Sun Life Financial Inc. (TSX-SLF, NYSE-SLF)... learn more. The next stock I will write about Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF)... learn more on Friday, April 8, 2016 around 5 pm.

Also, on my book blog I have put a review of the book Smarter by Dan Hurley learn more...

This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife Financial 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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