Friday, February 15, 2019

IGM Financial Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Financial. The stock is cheap but no one seems to expect any change to the better in the near future. It has not increased its dividend since 2015 and there is no sign of a future increase, so I do not think I can still call it a dividend growth stock anymore. On the other hand, no one is suggesting that they will be cutting the dividend either. See my spreadsheet on IGM Financial Inc.

I do not own this stock of IGM Financial (TSX-IGM, OTC-IGIFF). I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by and I wanted to rationalize my portfolio. So, I sold this stock and bought more of Power Financial. I purposely sold at a low point to reduce taxes and did a buy at a low price also.

When I was updating my spreadsheet, I noticed the performance of this stock has been low to moderate for quite some time. For example, Revenue is up by 3.85% and 1.85% per year over the past 5 and 10 years. Revenue per share is up by 4.82% and 2.72% per year over the past 5 and 10 years. The difference between these growth rates is due to buybacks.

This stock used to be a dividend growth stock. It has had a hard time since the 2008 bear market with low to non-existent dividend growth. There has been no dividend increases since 2015 and analysts do not see any in the near future either

The current dividend yield is good but the yields used to be in the moderate range. The current dividend yield is 6.59% with 5, 10 and historical median yields at 5.58%, 5.20% and 3.43%.

They can still afford their dividends, but payout is on the high side. The Dividend Payout Ratio for 2018 for EPS was 71% with 5 year coverage at 75%. It would probably need to be in the 50% range before the company raises dividends again. The DPR for CFPS for 2018 was a high at 59% with 5 year coverage at 48%. I would prefer to see this at 40% or less.

The debt ratios are fine, but I would like to see some ratios at better points. The long Term Debt/Market Cap Ratio is good at 0.25. The Liquidity Ratio is good also at 1.92 for 2018 with 5 year median also at 1.92. The Debt Ratio is low at 1.42 with 5 year ratio at 1.44. I prefer this at 1.50. The Leverage and Debt/Equity Ratios for 2018 are a bit high at 3.39 and 2.39 with 5 year medians at 2.86 and 1.86. I prefer these to be below 3.00 and 2.00 respectively.

The Total Return per year is shown below for years of 5 to 28 to the end of 2018. 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.

All stocks were down a lot by the end of December of 2018. However, it would appear that it has not made much for shareholders for a while.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.91% -6.12% -11.17% 5.05%
2008 10 1.18% 5.09% -1.32% 6.41%
2003 15 5.63% 6.05% -0.02% 6.06%
1998 20 9.30% 6.00% 0.81% 5.19%
1993 25 12.08% 9.68% 4.09% 5.59%
1990 28 11.76% 16.40% 8.46% 7.94%


So far, the stock is up 10% this year and this helps the total return for the last 5 years, but still total returns are really low for the past 15 years.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.91% 2.12% -3.74% 5.86%
2008 10 1.18% 3.47% -2.14% 5.62%
2003 15 5.63% 5.10% -0.47% 5.57%
1998 20 9.30% 8.57% 2.56% 6.01%
1993 25 12.08% 12.28% 5.63% 6.65%
1990 29 11.76% 16.41% 8.52% 7.89%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.74, 12.96 and 15.17. The corresponding 10 year ratios are 12.13, 14.52 and 16.18. The corresponding historical ratios are 13.63, 17.42 and 18.20. The current P/E Ratio is 10.98 based on a stock price of $34.15 and 2019 EPS estimate of $3.11. This stock price testing suggests the stock price is relatively cheap.

I get a Graham Price of $35.96. The 10 year low, median, and high median Price/Graham Price Ratios are 1.11, 1.26 and 1.40. The current P/GP Ratio is 0.95 based on a stock price of $34.15. This stock price testing suggests the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 2.31. The current P/B Ratio is 1.85 based on Book Value of $4,452M, Book Value per Share of $18.48 and a stock price of $34.15. The current ratio is 20% below the 10 year median ratio. This stock price testing suggests the stock price is relatively cheap.

I get an historical median dividend yield of 3.43%. The current dividend yield is 6.59% based on dividends of $2.25 and a stock price of $34.15. The current yield is 92% above the median historical yield. This stock price testing suggests the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.02. The current P/S Ratio is 2.58 based on 2019 Revenue estimate of $3,185M and Revenue per Share of $13.22 and a stock price of $34.15. The current ratio is some 36% below the 10 year median ratio. This stock price testing suggests the stock price is relatively cheap.

Results of stock price testing is that all the tests are showing that the stock price testing suggests the stock price is relatively cheap.

When I look at analysts’ recommendations, I find Buy (4), Hold (3) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $36.75. This implies a total return of 14.20% with 7.61% from capital gains and 6.59% from dividends.

See what analysts are saying on Stock Chase. A few analysts site their high fees but most think it will do fine. Victoria Hetherington on Motley Fool thinks this might be a stock for your TFSA. Renee Allred on Simply Wall Street seems to miss the fact that this company is largely owned by Power Financial. IGM talks about their fourth quarterly results on Newswire Canada. Mary Kom on Fairfield Current talks about some analyst’s recommendations on this stock.

IGM Financial is the largest non-bank-affiliated asset manager in Canada. The firm is part of the Power Financial group of companies, which includes Great West Life, London Life, Canada Life, and Putnam Investments. IGM has two main operating divisions--Investors Group and Mackenzie Financial--that provide investment management products and services. Its web site is here IGM Financial Inc.

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 Manulife Financial Corp. (TSX-MFC, NYSE-MFC) ... learn more on Tuesday, February 19, 2019 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.

1 comment:

  1. Really helpful information. thanks for it.
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