Tuesday, February 21, 2017

Manulife Financial Corp

Sound bite for Twitter and StockTwits is: Dividend growth stock. I still have hope that my investment in this stock will turn out to be a good investment. So far it has not been great either for capital gains or dividend growth. It does seem to be turning around. 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. I had some more money to spend and wanted to buy stock of dividend paying company I owned, for which I did not own too much. In April 2009, I was looking for something else to buy and Manulife was at a good price. In April 2013, I need to buy higher dividend stocks for my RRIF account. There was some money after RRSP sells, so I bought more MFC.

I have a fairly large investment in this stock, but it has not done well. I first bought this stock in 2005 and have made several purchases since then. My total return is 2.21% per year. I have a return because of dividends. My total return includes 2.33% dividends per year and a slight loss of capital at 0.12% per year. Dividends have paid for some 21.5% of the cost of the stock I hold.

The company has had problems since the last recession. They cut the dividend 50% in 2009. Dividends were flat for a few years then they started to increase them again in 2014. Dividend growth is at 7.3% and 0.2% per year over the past 5 and 10 years. They have just declared another dividend increase for March 2017 which is an increase of 10.8%. Current dividends at $0.82 are not quite back to the $1.00 they were in 2008.

The good things are that the Assets under Management, Comprehensive Income and Cash Flow are growing. The AUM has grown by 14.4% and 9% per year over the past 5 and 10 years. Comprehensive Income has grown at 25.6% and 20.1% per year over the past 5 and 10 years.

Cash Flow has increased by 11.9% and 8.9% per year over the past 5 and 10 years. However, since the outstanding shares have increased by 1.9% and 2.5% per year over the past 5 and 10 years, the Cash Flow per Share is lower at 9.8% and 6.3% per year over the past 5 and 10 years. Because of the increase in outstanding shares, per share values are a better indicator of growth.

EPS has grown over the past 5 years. The growth is at 134% per year. The 10 year growth is a negative 5.6%. The 5 year growth when compared to the past does not look as good. The 5 and 10 year running average growth is 13% and a negative 3.3%. This points out that while the current growth is good it does not compare as well to the past EPS.

I get 5 year Price/Earnings per Share Ratios of 10.82, 13.74 and 15.86. The corresponding 10 year ratios are 11.42, 17.27 and 16.82. The historical ones are 11.37, 14.14 and 16.31. The current P/E Ratio is 11.82 based on a stock price of $24.83 and 2017 EPS estimate of $2.10. This stock price testing suggests that the stock price is relatively reasonable and below the median. It is getting close to being relatively cheap.

I get a Graham Price of $30.25. The 10 year low, median and high median Price/Graham Price Ratios are 0.74, 0.93 and 1.15. The current P/GP Ratio is 0.79 based on a stock price of $24.83. This stock price testing suggests that the stock price is relatively reasonable and below the median. It is getting close to being relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.16. The current P/B Rati o is 1.28 based on BVPS of $19.37 and a stock price of $24.83.The current P/B Ratio is 10.3% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. The problem is that Book Value and BVPS declined after 2008 and is now growing again. The decline in book value was basically the lack of earnings.

The historical dividend yield is 2.47%. The current dividend yield is 3.30% based on dividends of $0.82 and a stock price of $24.83. The current dividend yield is some 34% higher than the historical one. This stock price testing suggests that the stock price rather cheap. However it is not that near to the historical high of 5.37%.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus is a Buy. The 12 month stock price consensus is $27.53. This implies a total return of 14.185 with 10.87% from capital gains and 3.30% from dividends.

Demetris Afxentiou of Motley Fool thinks that this company is currently a great investment opportunity. Brent Sawyer on Sports Perspective say this company has a consensus recommendation of Buy from 12 analysts. The Financial Canadian did an extensive review of this stock on Dividend Earner blog. See what analysts are saying about this stock on Stock Chase. Most like this company going forward.

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. Its web site is here Manulife Financial Corp.

The last stock I wrote about was about was Home Capital Group (TSX-HCG, OTC- HMCBF)... learn more . The next stock I will write about will be Emera Inc. (TSX-EMA, OTC-EMRAF)... learn more on Wednesday, February 22, 2017 around 5 pm. Today on my other blog I will write about Socialism... learn more .

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.

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