I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.
When I was updating my spreadsheet, I noticed the colour of results changing from dark purple and blue to blue and green. I have also done well with this company which I have had since 2007 with a total return of 14.07% and 11.54% from capital gains and 2.53% from dividends.
From my earliest purchase I am making a dividend yield of 6.17% on my original purchase. This company has a low yield in the 1% range, but moderate to good increases. The value of such companies is that over the long term, you get good increases in your dividend income. This is why, I think that such stock belongs in a pension plan you are building for yourself.
Dividend yields are low and they have been low since 1993. The current dividend yield is 1.58% with 5, 10 and historical yields at 1.98%, 2.12% and 1.85. It has had a moderate level of 2% sometimes. The dividend growth has been moderate (8% to 14% ranges) except for last 25% when the it was good at 16.02% per year (over 15% range). The last dividend increase was in 2019 and it was for 17.4%. See the chart below.
The Dividend Payout Ratios are low and this is good. The DPR for 2018 for EPS is 29% with 5 year coverage at 33%. The DPR for 2018 for CSPF is 17% with 5 year coverage at 19%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is low at 0.15. The Liquidity Ratio is moderate at 1.58, but with a good 5 year median of 2.14. The Debt Ratio is moderate at 1.70 with a good 5 year median of 2.22. Leverage and Debt/Equity Ratio are moderate at 2.44 and 1.44.
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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 11.53% | 17.29% | 15.28% | 2.01% |
| 2008 | 10 | 9.88% | 16.58% | 14.44% | 2.13% |
| 2003 | 15 | 13.68% | 13.72% | 11.84% | 1.88% |
| 1998 | 20 | 12.76% | 14.80% | 12.86% | 1.93% |
| 1993 | 25 | 16.02% | 18.87% | 16.16% | 2.72% |
| 1990 | 28 | 14.82% | 23.07% | 18.93% | 4.14% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.47, 18.11 and 21.84. The corresponding 10 year ratios are 14.21, 16.43 and 18.40. The corresponding historical ratios are 13.10, 14.86 and 18.58. The current P/E Ratio is 18.96 based on a stock price of $68.25 and 2019 EPS estimate of $3.60. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $36.39. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.49 and 1.70. The current P/GP Ratio is 1.88 based on a stock price of $68.25. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 3.22. The current P/B Ratio is 4.18 based on Book Value of $1,328M, Book Value per Share of $16.35 and a stock price of $68.25. The current ratio is some 30% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.85%. The current dividend yield is 1.58% based on Dividends of $1.08 and a stock price of $68.25. The current dividend yield is some 15% 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 1.47 based on a stock price of $68.25, Revenue estimate for 2019 of $3,763M and Revenue per Share of $46.33. The current P/S Ratio is some 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side. The only one to show differently is the dividend yield test. However, there has recently been a large increase in dividends of 17.4%. This is higher than what has been normal.
When I look at analysts’ recommendations, I find Buy (4) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $69.00. This implies a total return of 2.68% with 1.10% from capital gains and 1.58% from dividends based on a current stock price of $68.25.
See what analysts are saying about this stock on Stock Chase. It is not well covered, but it is mostly liked. Andrew Button on Motley Fool says its growth has been frothy lately. A writer on Simply Wall Street does not like the negative growth in cash flow for 2019. A writer on Capital Cube thinks this stock is overvalued. Theresa McIntyre on Z Tribune talks about some recent analysts ratings.
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The larger segment by revenue, Equipment Group includes a Caterpillar dealership and rental operation of construction equipment. CIMCO offers solutions for the design, engineering, fabrication, and installation of industrial and recreational refrigeration systems. The company operates primarily in Canada and derives a smaller portion of sales from the United States of America. Its web site is here Toromont Industries Ltd.
The last stock I wrote about was about was Alaris Royalty Corp (TSX-AD, OTC-ALARF) ... learn more. The next stock I will write about will be Russel Metals Inc. (TSX-RUS, OTC-RUSMF) ... learn more on April 08, 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.
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