Intact Financial Corp

Sound bite for Twitter and StockTwits is: Price is reasonable to expensive. This looks like a good dividend growth stock, but it is rather expensive at the present time. See my spreadsheet on Intact Financial Corp.

I do not own this stock of Intact Financial Corp (TSX-IFC, OTC- IFCZF). I am following this stock because in November 2011, the TD Bank put out a special report on the merits of dividend investing. At the end of the report they listed a number of Canadian stocks as Equity Yield ideas. This was one stock listed that I did not follow.

This is a dividend growth company that started to pay dividends in 2005 after they went public in 2004. They have raised their dividends every year since 2005. The company pays a moderate dividend with moderate dividend increases. The current dividend yield is 2.60% based on dividends of $2.32 and a stock price of $89.08. The dividends have grown at 9.3% and 12.6% per year over the past 5 and 10 years. The last dividend increase was made in 2016 and it was for 9.4%.

The Dividend Payout Ratio for EPS for 2015 was 41% with a 5 year median value of 37%. The DPR for CFPS was 30% with a 5 year median value of 29%. These ratios are expected to be similar in 2016.

The change in outstanding shares is a mixed bag. Shares are up by 3.2% over the past 5 years and down by 1.6% over the past 10 years. Shares are increased by Shares Issues and decreased by Buy Backs. Because of increase in shares over the past 5 years, I think we need to look at per share values. They have "stock incentives" rather than stock options. They purchase required shares on the open Market. Cost comes out of shareholders' equity. So outstanding shares are not affect by their stock incentive plan.

They have also done better in the past 5 years and in the past 10 years. An example is in revenue. For revenue, it has grown at 11.5% and 6% per year over the past 5 and 10 years. The revenue per share has grown at 8% and 6.2% per year over the past 5 and 10 years. This also shows the effect of changes in outstanding shares over the past 5 and 10 years.

Debt ratios are rather normal for a financial company. The Return on Equity was below 10% one in the past 5 years, but 3 times in the past 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.90, 13.95 and 15.00. The 10 year corresponding values are close at 12.41, 13.68 and 14.95. The current P/E Ratio is 15.39 based on a stock price of $89.08 and 2016 EPS estimate of $5.79. This stock price testing is suggesting that the stock price is relatively expensive, but just into expensive territory.

I get a Graham Price of $72.24. The 10 year low, median and high median Price/Graham Price Ratios are 0.97, 1.07 and 1.17. The current P/BP Ratio is 1.23 based on a stock price of $89.08. This stock price testing is suggesting that the stock price is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.81. The current P/B Ratio is 2.22 a values some 23% higher. The current P/B Ratio is based on a stock price of $89.08 and BVPS of $40.06. This stock price testing is suggesting that the stock price is relatively expensive.

I get a historical median dividend yield of 2.73%. The current dividend yield is 2.60% based on a stock price of $89.08 and dividends of $2.32. The current dividend yield is some 4.6% lower than the historical median dividend yield. This stock price testing suggests that the stock price is reasonable, but above the median.

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 $97.71. This implies a total return of this implies a total return of 12.29% with 2.60% from dividends and 9.69% from capital gains based on a current stock price of $89.08.

Nelson Smith of Motley Fool likes this company because it has slowly been acquiring smaller companies in its niche. John Shmuel in a recent Financial Post article said that the estimated losses from Alberta are more than manageable for this company. Dividend Earner at Seeking Alpha thinks that this is a good stock for dividend growth. See what analyst are saying about this company 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.

The last stock I wrote about was about was AGT Food and Ingredients Inc. (TSX-AGT, OTC-AGXXF)... learn more . The next stock I will write about will be Saputo Inc. (TSX-SAP, OTC-SAPIF)... learn more on Wednesday, June 29, 2016 around 5 pm. Tomorrow on my other blog I will write about Retirement Myth of 4%... learn more on Tuesday, June 28, 2016 around 5 pm.

Intact Financial Corporation is the largest provider of property and casualty insurance in Canada. Intact offers home, auto and business insurance through Intact Insurance, Novex Group Insurance, Belair Direct, GP Car and Home and BrokerLink. Its web site is here Intact 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.