Sound bite for Twitter and StockTwits is: Dividend Growth Financial. This stock is cheap. It is not only dealing with very low interest rates, but FinTech. Current rising rates will be good for this industry and they are investing in FinTech. See my spreadsheet on Power Financial Corp.
I own this stock of Power Financial Corp. (TSX-PWF, OTC-POFNF). When I sold some bonds in 2001, I had money to spend. This was a stock on my hit list and was selling at a reasonable price. This stock was on Mike Higgs' dividend growth stocks and that is why I started a spreadsheet to investigate this stock in the first place.
This insurance company did not have a good fourth quarter in 2017. Since 2009 it has made some progress but 2015 was the good year. The years of 2016 and 2017 are not so good.
Until 2009, the company had a very good record of dividend growth. Then dividends were flat for 6 years before dividend growth was restarted. You can see this in the table below where the 5 and 10 year growth in dividends is a lot lower than the previous years.
The company has had no trouble in covering their dividends with earnings. However, keeping the dividends flat for 6 years certainly helped out. The Dividend Payout Ratio for 2017 was 68% with 5 year coverage at 53%. The very low interest rates were hard on life insurance companies.
The Total Return is show below for years of 5 to 26. 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. Except for the 10 year period, shareholders have done well. However growth is a lot lower today than in the past.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | 3.09% | 9.83% | 4.86% | 4.97% |
| 10 | 3.46% | 2.19% | -1.59% | 3.78% |
| 15 | 7.91% | 9.30% | 4.38% | 4.91% |
| 20 | 10.53% | 9.61% | 5.21% | 4.39% |
| 25 | 12.41% | 17.72% | 10.88% | 6.84% |
| 26 | 12.29% | 17.42% | 10.84% | 6.59% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 10.38m 11.89 and 12.95. The corresponding 10 year ratios are 10.48, 12.00 and 13.55. The historical ratios are 10.30, 12.05 and 14.97. The current P/E Ratio is 10.23 based on 2018 EPS estimate of $3.21 and a stock price of $32.85. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $42.30. The 10 year low, median and high median Price/Graham Price Ratios are 0.82, 0.93 and 1.05. The current P/GP Ratio is 0.78 based on a stock price of $32.85. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share of 1.64. The current P/B Ratio is 1.33 based on Book Value of $17,383, Book Value per Share of $24.77 and a stock price of $32.85. The current P/B Ratio is some 19.4% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. If the current ratio was 20% below the 10 year median the stock price would be relatively cheap.
I get an historical median dividend yield of 3.38%. The current dividend yield is 5.27% based on dividends of $1.73 and a stock price of $32.85. The current dividend yield is some 56% higher than the historical median yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.59. The current P/S Ratio is 0.45 based on 2018 Revenue estimate of $51,561, Revenue per Share of $72.23 and a stock price of $32.85. The current ratio is some 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
When I look at analysts' recommendations I find Buy (1) and Hold (6). The consensus recommendations would be a Hold. The 12 month stock price consensus is $37.14. This implies a total return of $18.33% with 13.06% from capital gains and 5.27% from dividends.
The company release fourth quarterly results via Cision. In this article on Robo Advisors, Money Sense talks about Wealthsimple teaming up with Power Financial Corp. GCR Staff Writer on Grove City Review says a Williams Percentage Range of -37 show stock is neither overbought nor oversold. See what analysts are saying about this company on Stock Chase. Analysts expect a good yield going forward to not much excitement or capital gain.
Power Financial Corp is a diversified international management and holding company. It holds interests, directly or indirectly, with companies in the financial services sector in Canada, the United States and Europe. Its web site is here Power Financial Corp.
The last stock I wrote about was about was TFI International (TSX -TFII, OTC-TFIFF)... learn more. The next stock I will write about will be Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF)... learn more on Wednesday, May 9, 2018 around 5 pm. Tomorrow on my other blog I will write about Rogers and Best Buy.... learn more on Tuesday, May 8, 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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