Wednesday, February 14, 2018

Manulife Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Different stock price testing are showing different results, but stock price is probably cheap to reasonable. See my spreadsheet on Manulife Financial Corp.

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). This stock is some 2.6% of my portfolio. I had been hoping for a better return but so far I have had this stock for almost 13 years and have made 2.74% total return per year. This consists of 0.33% per year in capital gains and 2.41% per year in dividends.

Certainly analysts think that this stock is going do much better going forward. However, this stock has not done well in the past. I have held this stock for over 12 years and have a total return of 2.7% per year. This is really not good. I certainly hope that this is going to change for me.

Dividends were cut by around 48% in 2009. They were then flat for 4 years before the company started to increase them again. The last increase was in 2017 and it was for 10.8%. However, dividends are still not back to the old amount and are some 12% lower still.

The thing is that they are increasing their dividends again and have been doing so since 2014. In looking at dividend growth, the growth is down a bit over the past 10 years but is up for durations of 5, 15 and 18 years. Over the past 10 years dividends are down by 0.7% per year. However, looking at the past 5, 15 and 18 years dividend growth is up by 9.5%, 6.5% and 8.2% per year.

They can currently afford their dividends. The Dividend Payout Ratio for 2017 is a bit high at 84%, but the 5 year coverage is 49% and in 2018 the DPR is expected to be lower again at 31%. The DPR for CFPS for 2017 is 10% with 5 year coverage of 9.1%. This is also good.

The long term total returns are rather mixed. I expect this improve in the future when price goes higher again. For people holding this stock for 10 years, they would have a total loss of 2.27% per year with a capital loss of 4.27% per year and dividends 2% per year. The best total return is the last 5 year where total return is at 17.92% per year. The 10 year return includes capital gains of 17.18% per year and dividends of 3.73% per year.

For the total return of over the past 15 years, this is low with a much better total return over 18 years since this stock was demutualized. The 15 and 18 year total returns are 6.07% and 9.77% per year. The portion that is attributed to capital gains is 2.92% and 5.97% per year. The portion that is attributed to dividends is 3.15% and 3.80% per year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.82, 13.78 and 17.74. The corresponding 10 year ratios are 11.42, 13.78 and 20.30. The historical ones are 11.52, 14.34 and 16.35. These are all fairly close. The current P/E Ratio is 9.57 based on a stock price of $25.08 and 2018 EPS estimate of $2.62. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $33.37. The 10 year low, median and high median Price/Graham Price Ratios are 0.74, 1.01 and 1.16. The current P/GP Ratio is 0.79 based on a stock price of $25.08. This stock price testing suggests that the stock price is reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.16. The current P/B Ratio is 1.33 based on Book Value of $37,436M, Book Value per Share of $18.89 and a stock price of $25.08. The current P/B Ratio is some 14.3% higher than the 10 year median. This stock price testing suggests that the stock price is relatively reasonable, but above the median. However, a P/B Ratio under 1.50 on an absolute basis says a stock is relatively cheap.

I get a historical median dividend yield of 2.69%. The current Dividend yield is 3.51% based on dividends of $0.88 and a stock price of $25.08. The current dividend yield is some 30% higher than the historical median. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.77. The current P/S Ratio is 0.88 based on 2018 Revenue of $56,801M, Revenue per Share of $28.66 and a stock price of $25.08. The current P/S Ratio is some 13% higher than the 10 year median. 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 (3), Buy (8), Hold (3) and Underperform (1). So these are all over the place. The consensus would be a Buy. The 12 month stock price target is $31.00. This implies a total return 26.87% with 23.60% from capital gains and 3.27% from dividends based on a current stock price of $25.08.

There is a news item on Cision talking about MFC issuing preferred shares to pay off outstanding debentures. MFC just announced on Cision a dividend increase for 2018 of 7.3%. Jacob Donnelly on Motley Fool shows that he does not know the difference between general and life insurance. They are totally different businesses. They See what analysts are saying about this stock on Stock Chase. They have mixed views on this company and on Life Insurance companies.

Manulife Financial Corp together with its subsidiaries provides individual life insurance and individual and group long-term care insurance services. Its business segments are Asia Division, Canadian Division, U.S. Division, and Corporate and Other. Its web site is here Manulife Financial Corp.

The last stock I wrote about was about was ARC Resources Ltd. (TSX-ARX, OTC-AETUF)... learn more. The next stock I will write about will be IGM Financial (TSX-IGM, OTC-IGIFF)... learn more on Friday, February 16, 2018 around 5 pm. Tomorrow on my other blog I will write about Good Quality Stocks.... learn more on Thursday, February 15, 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.

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