I do not own this stock of Wajax Corp. (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.
When I was updating my spreadsheet, I noticed that the company did not do well after 2012, but there is improvement in 2017 and in the first two quarters of 2018. This stock used to be an income trust from 2004 to 2011. As an income trust they paid quite high dividends.
Since starting dividends in 1986, the dividends have gone up and down and been cancelled. The historical high is around 14.38% and low at 0%. This historical median is 4.27%. See the chart below. Where there is n/a, it means that at the start of the period the dividends were 0%. There were no dividends from 1992 to 2003. Dividends were restarted when the company became an income trust.
The dividend yields have always been in the moderate (2 and 3% range) to good (over 4%). The current dividend is 3.82% with 5, 10 and historical medians are 5.12%, 6.30% and 4.27%. The dividends were decreasing from 2013 to 2016 inclusive. They have been flat since 2016. There is currently no growth in dividends.
They can currently afford their dividends as the Dividend Payout Ratio for EPS for 2017 is 65%. However, 5 year coverage is 124%. The DPR for CFPS is better with the DPR for CFPS in 2017 at 24% and 5 year coverage at 38%. Analysts expect the DPR for EPS to decrease in 2018 and following years so there might be hope for future growth in dividends.
The Long Term Debt/Market Cap Ratio is good at 0.29. The other debt ratios are good also with Liquidity Ratio at 2.21 and the Debt Ratio at 1.69. The Leverage and Debt/Equity Ratios at 2.44 and 1.44 are typical.
The Total Return per year is show below for years of 5 to 31. 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.
In 2002, 15 years ago, the stock price hit a low point, but the company provided great dividends after 2004 and two special dividends in 2007 and 2008.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | -19.89% | -4.69% | -9.55% | 4.86% |
| 10 | -12.68% | 6.29% | -2.59% | 8.88% |
| 15 | n/a | 41.03% | 13.09% | 27.94% |
| 20 | n/a | 8.14% | 1.59% | 6.55% |
| 25 | n/a | 11.76% | 5.48% | 6.28% |
| 30 | 1.95% | 8.05% | 3.06% | 4.99% |
| 31 | 1.89% | 6.09% | 1.73% | 4.36% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.22, 14.23 and 16.42. The corresponding 10 year ratios are 8.77, 10.68 and 12.63. The corresponding historical ratios are 9.36, 11.39 and 13.87. The current P/E Ratio is 11.34 based on a stock price of $26.20 and 2018 EPS estimate of $2.31. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $27.89. The 10 year low, median, and high median Price/Graham Price Ratios are $0.92, 1.14 and 1.34. The current P/GP Ratio is 0.94 based on a stock price of $26.20. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.16. The current P/B Ratio is 1.75 based on Book Value of $300M, Book Value per Share of $14.97 and a stock price of $26.20. The current ratio is some 19% below the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 4.27%. The current dividend yield is 3.82% based on dividends of $1.00 and a stock price of $26.20. The current yield is some 11% below the historical median. 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 0.37. The current P/S Ratio is 0.36 based on 2018 Revenue estimate of $1,463M, Revenue per Share of $72.90 and a stock price of $26.20. The current ratio is some 4% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I think that the best tests for this stock currently is the Graham Price, B/P Ratio and P/S Ratio tests. These tests all show a stock price that is reasonable and below the median.
The P/E Ratios have moved around a lot. This is often not a good test. Also, with this company’s history of dividend payments and the fact that is was a corporation, then an income trust and then a corporation makes the dividend yield test questionable. That is because what can be paid in dividends is calculated differently with income trusts and corporations.
When I look at analysts’ recommendations I find Buy (2) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $31.63. This implies a total return of 24.54% with 20.73% from capital gains and 3.82% from dividends based on a current stock price of $26.20.
Liz Campbell on Simply Wall Street says that this company’s Return On Capital Employed (ROCE) is low. The company talks about its four quarterly results for 2017 on Canadian News Wire. Ambrose O'Callaghan on Bay Street talk about the company share going up 7% after reporting of the fourth quarter of 2017. Mat Litalien on Motley Fool says this company is a good buy. See what analysts are saying about this stock on Stock Chase. There are few analysts following this stock.
Wajax Corp is a distributor of industrial components. Its products include machinery used for construction, machines used in power generation and transmission and other industrial components used in businesses like forestry and mining. Its web site is here Wajax Corp.
The last stock I wrote about was about was Telus Corp. (TSX-T, NYSE-TU) ... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Monday, September 24, 2018 around 5 pm.
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