Power Financial Corp.

Sound bite for Twitter and StockTwits is: Price is probably cheap. Life insurance companies are still having difficulties with very low interest rates. I expect that when rates pick up they will do better, but who knows when that will happen. This sort of economic situations can go on for longer than you ever expect. See my spreadsheet on Power Financial Corp.

I own this stock of Power Financial Corp. (TSX-PWF, OTC-POFNF). When I sold some bonds in 2001, I had money to spend. This was a stock on my hit list and was selling at a reasonable price. This stock was on Mike Higgs' dividend growth stocks and that is why I started a spreadsheet to investigate this stock in the first place.

This has been a dividend growth stock, but as with all insurance companies, they had a period lately when no dividend increases were made. This stock had a long one from 2010 to 2014. In 2015 they increased the dividends by 6.2%. The dividends increased again in 2016 by 5.4%.

Historically the dividend increases where higher. For example, between 1993 and 2008 the median increase was 18.5%. Currently life insurance companies are having a hard time with very low interest rates. However, since dividend increases has decrease, the dividend yield has gone up. When I bought my stock in 2001 and 2004, the dividend yields were 2.57% and 2.53% respectively. Now the dividend yield is 4.76%. This is based on dividends of $1.57 and a stock price of $32.99.

The stock I bought in 2001, some 14 years ago, is earning a dividend yield of 8.28% on my original purchase price. My dividend growth is 8.7% per year. If you bought this stock today with a dividend yield of 4.76% and growth of 5% per year, then in 14 years' time you could be earning a dividend yield of 9.42% on your original purchase price ($32.99).

My total return on this stock is mediocre, but I do expect to do better in the future. My total return is 7.63% with 3.21% from capital gains and 4.42% from dividends. I have received some $13.39 in dividends with a cost of $23.23, so my dividends have covered 57.6% of the cost of my stock.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.25, 11.50 and 13.16. The corresponding 10 year ratios are 10.37, 11.99 and 13.55. The corresponding historical ratios are 10.05, 12.05 and 14.97. The current P/E Ratio is 10.18 based on a stock price of $32.99 and 2016 EPS estimate of $3.24. This stock price testing suggests that the stock price is probably relatively cheap.

I get a Graham Price of $41.65. The 10 year Price/Graham Price Ratios are 0.82, 0.95 and 1.14. The current ratio is 0.79 based on a stock price of $32.99. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.70. The current P/B Ratio is 1.39 based on BVPS of $23.79 and a stock price of $32.99. The current P/B Ratio is some 18.6% lower than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. On an absolute basis, a P/B Ratio of 1.50 or lower shows a cheap stock price.

The historical dividend yield is 3.18% and the current dividend yield of 4.76% is some 49.7% lower. This stock price testing suggests that the stock price is probably relatively cheap.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Hold, but the consensus recommendation would be a Buy. The 1`2 month stock price is $36.29. This implies a total return of $14.765 with 10.00% from capital gains and 4.76% from dividends.

Nelson Smith of Motley Fool gives 3 reasons to buy this stock. This article by Andy Holloway in the Financial Post talks about this company investing in FinTech. See what analysts are saying about this stock on 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..

Yesterday on my other blog I wrote about Dividend Stocks May 2016... learn more . The next stock I will write about will be Thomson Reuters Corp. (TSX-TRI, NYSE-TRI)... learn more on Friday, May 6, 2016 around 5 pm.

Also, on my book blog I have put a review of the book The Autistic Brain by Temple Grandin learn more...

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Its web site is here Power 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.