I own this stock of Saputo Inc. (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. I bought this stock first in 2006 for my RRSP account. Because I am now taking money from my RRSP accounts, I have been selling this stock because of the low dividend. I still like this stock so I have been buying it in my TFSA.
What I noticed when updating my spreadsheet was that dividend growth has slowed down a lot over the past 5 years. You can see the growth in the table below. The most recent increase was in 2017 and it was for 6.7%.
The dividend yield is low. The current, 5 year, 10 year and historical dividend yields are 1.47%, 1.53%, 1.74% and 1.65%. Dividend growth hit a peak in 2008 and have been falling since.
Dividends are affordable. The Dividend Payout Ratio for the 2018 financial year is 29% with 5-year coverage of 32%. The DPR for CFPS for the 2018 financial year is 25% with 5-year coverage of 19%.
Debt Ratios are good. The Long Term Debt/Market Cap is low at just 0.09. The Liquidity Ratio is 1.87 and the Debt Ratio is 2.50. These are high and therefore good. The Leverage and Debt/Equity Ratios are low and therefore good at 1.67 and 0.67 respectively.
The Total Return per year is show below for years of 5 to 20. 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.|
The 5 year low, median and high median Price/Earnings per Share Ratios are 18.32, 21.17 and 24.35. The corresponding 10-year ratios are 17.57, 19.59 and 21.76. The corresponding historical ratios are 14.85, 18.53 and 21.43. The current P/E ratio is 20.88 based on a stock price of $43.42 and 2019 EPS estimate of $2.08. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $24.07. The 10 year low, median and high median Price/Graham Price Ratios are 1.57, 1.80 and 2.00. The current P/GP Ratio is 1.80 based on a stock price of $43.42. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get 10-year median Price/Book Value per Share of 3.55. The current P/B Ratio is 3.51 based on Book Value of $4,798M, Book Value per Share of $12.38 and a stock price of $43.42. The current P/B Ratio is some 1.2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get an historical median dividend yield of 1.65%. The current dividend yield is 1.47% based on dividends of $0.64 and a stock price of $43.42. The current yield is some 10.7% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.21. The current P/S Ratio is 1.21 based on 2019 Revenue estimate of $13,926M, Revenue per Share of $35.95 and a stock price of $43.42. The current P/S Ratio is the same as the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
When I look at analysts’ recommendations I find Buy (3), Hold (5) and Underperform (1) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $45.00. This implies a total return of 5.11% with 3.64% from capital gain and 1.47% from dividends.
Victoria Hetherington of Motley Fool thinks that this company is well-placed to weather any diary dispute. There is a press release on Market Insider talking about Saputo acquiring a company. Saputo has been growing by acquiring other companies. Tara Deschamps of The Canadian Press on CTV News. talks about the fact that Saputo might win if they put tariffs on US cheese. See what analysts are saying about this company on Stock Chase. The consumer staple sector is not doing that well at the moment.
Saputo Inc. produces markets and distributes dairy products including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients in Canada, the United States, Argentina, and Australia. Its web site is here Saputo Inc..
The last stock I wrote about was about was Parkland Fuel Corp (TSX-PKI, OTC-PKIUF)... learn more. The next stock I will write about will be AGT Food and Ingredients Inc. (TSX-AGT, OTC-AGXXF)... learn more on Friday, June 29, 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.
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