IGM Financial Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. This stock is showing up as cheap. If you think it is a good company it is time to buy. It has not done well in the immediate past but this seems to be changing. If you do buy you will get a very good dividend (5.56% current yield) while you wait for the stock to recover. See my spreadsheet on IGM Financial Inc.

I do not own this stock of IGM Financial (TSX-IGM, OTC-IGIFF) but my son does. I am following this stock because I used to own this stock. The stock was on Mike Higgs' list of dividend growth stocks and on the other Dividend lists at that time.

This company certainly has not been doing well lately. There has only been one dividend increase in the last 5 years. The dividend Payout Ratio for 2017 is the highest at 90% than it has ever been. However, the 5 year coverage is much lower at 75% and DPR is expected to go to 67% in 2018. This long slow recovery from the last recession has been very hard on financials.

This stock used to have good dividend growth. However, dividend growth has suffered after 2008. Over the past 5 and 10 years, dividend growth has been low. Five out of the past 10 years have had no dividend increases and 4 out of the past 5 years have had no any increases. The growth in dividends over the past 5 and 10 years is at 0.9% and 2.4% per year.

Dividend growth over longer periods is better. Dividends have grown by 6.6%, 10.6%, 12.8% and 12.2% per year over the past 5, 10, 15, 20, 25 and 27 years. Analysts expect that the company will again start to raise dividends this year. If this happened it would be a good sign that the company believed it was recovering.

Dividend yields are quite high with current yields at 5.56%. Dividend yield medians over the past 5 and 10 years are higher than historical ones. The median dividend yield over the past 5 and10 years is 5.35% and 5.14%. This historical median dividend yield is more moderate at 3.42%.

Not much money has been made by shareholders over the past 5 and 10 years. The total returns over the past 5 and 10 years are 6.38% and 3.25% per year. The portion of the total return attributed to dividends is 5.19% and 4.49% per year over these periods. Over the past 5 years the portion of the total return attributed to capital gain is 1.20% per year. Over the past 10 years there has been a capital loss of 1.20% per year.

For those shareholders who have held this stock for longer periods, the return is mostly much better. The total return over the past 15, 20, 25 and 27 years is 9.04%, 7.82%, 13.62% and 16.97% per year. The portion of the total return over these periods attributable to dividends is 5.45%, 4.42%, 5.63% and 6.75%. The portion of this total return attributable to capital gains is 3.59%, 3.40%, 7.98% and 10.22%. If you hold stocks over the very long term there is bound to be different levels of returns over different periods.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.84, 16.22 and 18.20. The corresponding 10 year ratios are 12.13, 14.52 and 16.85. The corresponding historical ratios are 13.70, 17.58 and 18.25. These are fairly consistent. The current P/E Ratio is 12.07 based on a stock price of $40.45 and 2018 EPS estimate of $3.35. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $38.26. The 10 year low, median and high median Price/Graham Price Ratios are 1.11, 1.26 and 1.41. The current P/GP Ratio is 1.06 based on a stock price of $40.45. This stock price testing suggests that the stock price is relatively cheap.

The 10 year Price/Book Value per Share Ratio is 2.44. The current P/B Ratio is 2.08 based on Book Value of $4,675M, Book Value per Share of $19.43 and a stock price of $40.45. The current P/B Ratio is some 15% below the 10 year median ratios. This stock price testing suggests that the stock price is reasonable and below the median.

The historical dividend yield is 3.42%. The current dividend yield is 5.56% based on dividends of $2.25 and a stock price of $40.45. The current dividend yield is some 63% above the historical one. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.02. The current P/S Ratio is 2.93 based on 2018 Revenue estimate of $3,317M, Revenue per Share of $13.78 and a stock price of $40.45. The current P/S Ratio is some 27% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations I find Strong Buy (1), Buy (6), Hold (1) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $47.00. This implies a total return of 21.76% with 16.19% from capital gains and 5.56% from dividends.

In this press release on Cision IGM talks about their fourth quarterly results and the fact that they were taking a onetime charge again the net earnings. Stan Pace on Stock News Times talks about recent analyst's recommendations on this stock. Cole Patterson likes this stock as a dividend stock on Simply Wall Street. The yield is currently high, but the dividends have only increased by 2.4% over the past 10 years because 4 of the past 5 years have had no dividend increase. See what analysts are saying about this stock on Stock Chase. They worry about it selling high fees Mutual Funds and the effect of the new government regulations.

IGM Financial Inc. is a financial services company. It is engaged in the distribution, management and administration of its investment funds. In addition, it also offers mortgage banking and servicing activities. Its web site is here IGM Financial Inc.

The last stock I wrote about was about was Manulife Financial Corp. (TSX-MFC, NYSE-MFC)... learn more. The next stock I will write about will be Emera Inc. (TSX-EMA, OTC-EMRA)... learn more on Monday, February 19, 2018 around 5 pm.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.