I own this stock of WSP Global Inc. (TSX-WSP, OTC-WSPOF). In Sept 2011 I rationalized my portfolio. I sold stocks that did not make it into my core and bought stocks that could of the same type. In this case selling Stantec and buying Genivar. In October 2011 I wanted to sell Enerflex because it is not a company I bought but a distribution from Toromont. I bought more Genivar, now called WSP Global.
The company is doing well. It used to be an income trust. Income trust companies have had trouble paying the same dividends as Income Trust can afford to pay higher dividends than corporations. They can pay out more than the EPS. For this company the Dividend Payout Ratio for EPS is coming down. Hopefully in the future they can start to raise dividends again.
This company used to be an Income Trust. As Income Trust companies could afford to payout a higher rate than EPS because of the tax situation, they often had very good dividends. When I bought this stock in 2011, the dividend yield was still quite high at 6.07%. However to get their Dividend Payout Ratio for EPS into order they stopped rising their dividends. So my dividend yield is still 6.07%.
There was dividend growth until 2009 and that is why the 10 to 11 year growth in dividends is positive, but the 5 year growth is 0%. See chart below.
Their Dividend Payout Ratio for EPS has been steadily declining and the one for 2017 was 72% with 5 year coverage at 89%. The DPR for CFPS is still a bit on the high side with a rate of 47% and 5 year coverage at 42%.
The Total Return is show below for years of 5 to 12. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | 0.00% | 30.90% | 25.58% | 5.32% |
| 10 | 4.18% | 12.88% | 8.58% | 4.30% |
| 11-12 | 10.17% | 22.77% | 16.09% | 6.68% |
For me, I have a total return of 22.10% with 17.67% from capital gains and 4.43% from dividends. Currently I am happy with the 6% dividend yield and look forward to the company again rising their dividends.
The 5 year low, median and high median Price/Earnings per Share Ratios are 18.17, 21.36 and 24.55. The 10 year corresponding ratios are 15.10, 19.04 and 23.16. The 12 year corresponding ratios are 15.10, 19.04 and 23.16 and are the same as the 10 year ratios. The current P/E Ratio is 20.97 based on a stock price of $63.34 and 2018 EPS estimate of 3.02. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $44.14. The 10 year low, median and high median Price/Graham Price Ratios are 0.87, 1.096 and 1.32. The current P/GP Ratio is 1.43 based on a stock price of $63.34. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share of 1.53. The current P/B Ratio is 2.21 based on Book Value of $2.58M, Book Value per Share of $28.67 and a stock price of $63.34. The current ratio is some 44% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.96%. The current dividend yield is 2.37% based on dividends of $1.50 and a stock price of $63.34. The current dividend yield is some 52% lower than the historical one. This stock price testing suggests that the stock price is relatively expensive.
There are problems with the dividend yield test. First Income Trust companies pay much higher dividend yields than corporations. The other thing is that the dividends have not changed since 2009. I therefore do not feel that this is a good test for this company.
The 10 year median Price/Sales (Revenue) Ratio is 1.05. The current P/S Ratio is 1.09 based on 2018 Revenue estimate of $5,988M, Revenue per Share of $58.05 and a stock price of $63.34. The current ratio is some 3.5% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
When I look at analysts' recommendations I find Buy (6) and Hold (4) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $63.36. This implies a total return of $2.40% with 0.03% from capital gains and 2.40% from dividends based on a current stock price of $63.34.
Rowena Monahan on Simply Wall Street expects this company to have good growth in the future. But Isabel Galloway also on Simply Wall Street see poor future growth. Vivian Park on Money Making Articles says that 75% of analysts are positive about this stock. See what analysts are saying about this stock on Stock Chase. They like the stock, but some think it is expensive.
WSP Global Inc. is a professional services firm, working with governments, businesses, architects & planners & providing solutions. It operates in different market sectors: property & buildings, transportation & infrastructure, industry & resources. Its web site is here WSP Global Inc.
The last stock I wrote about was about was Fortis Inc. (TSX-FTS, OTC-FRTSF)... learn more. The next stock I will write about will be Thomson Reuters Corp. (TSX-TRI, NYSE-TRI)... learn more on Friday, April 27, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividend Income.... learn more on Thursday, April 26, 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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