I do not own this stock of Intact Financial Corp (TSX-IFC, OTC-IFCZF). I am following this stock because in November 2011, the TD Bank put out a special report on the merits of dividend investing. At the end of the report they listed a number of Canadian stocks as Equity Yield ideas. This was one stock listed that I did not follow. This and Wajax are from TD Report on dividend investing.
When I was updating my spreadsheet, I noticed that they have been doing quite well lately. They are increasing the dividends at a higher rate than previously. The last 6 increases have been above 9% to 2018 but and the most recently one in was in 2019 was lower at 8.6%
The dividend yields from this stock are moderate (2 to 4% range). The current dividend yield is 2.51%, with 5, 10 and historical ones at 2.56%, 2.71% and 2.69%. The dividend growth is also moderate (8 to 14% ranges). The dividend growth over the past 5 years is at 9.73% per year. The last dividend increase was for 8.65 and it was in 2019.
The Dividend Payout Ratios are good. The DPR for 2018 for EPS is 58% with 5 year coverage at 46%. The DPR for CFPS for 2018 is 35% with 5 year coverage at 31%.
Debt Ratios are fine for a financial services stock. The Long Term Debt/Market Cap is 0.16. I calculate the Liquidity Ratio to be 1.90, but this is not an important ratio for a Financial Services stock. The Debt Ratio is 1.38 which is fine for a Financial Services stock. The Leverage and Debt/Equity Ratios are 3.64 and 2.64 respectively.
The Total Return per year is shown below for years of 5 to 14 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 9.73% | 10.31% | 7.41% | 2.90% |
| 2008 | 10 | 8.49% | 15.66% | 12.12% | 3.55% |
| 2004 | 14 | 11.89% | 12.09% | 9.10% | 2.99% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.00, 17.43 and 18.87. The corresponding 10 year ratios are 15.96, 17.31 and 18.66. The corresponding historical ratios are 12.90, 13.95 and 15.00. The current P/E Ratio is 18.47 based on a stock price of $122.81 and 2019 EPS estimate of $6.65. This stock price testing suggests that the stock price is relatively reasonable, but above the median.
I get a Graham Price of $86.67. The 10 year low, median, and high median Price/Graham Price Ratios are 1.12, 1.29 and 1.39. The current P/GP Ratio is 1.42 based on a stock price of $122.81. 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 1.93. The current P/B Ratio is 2.45 based on Book Value of $6,988M, Book Value per Share of $50.21 and a stock price of $122.81. The current ratio is some 27% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.98%. The current dividend yield is 2.48% based on Dividends f $3.04 and a stock price of $122.81. The current yield is 8% below the historical 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 1.48. The current ratio is 1.69 based on 2019 Revenue estimate of $10,130, Revenue per Share of $72.78 and a stock price of $122.81. The current ratio is 14% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable, but above the median.
Results of stock price testing is that the stock price is probably reasonable, but it is on the high side. Most of the testing is showing the stock price as relatively reasonable but above the median. However, the P/B Ratio test is showing the stock as expensive and this should not be ignored.
Is it a good company at a reasonable price? This is a solid company. The increase in the dividend growth rate is a good sign. It maybe a bit pricey at the current time. Debt Ratios are fine and it has good Dividend Payout Ratios. It is a general insurance company so earnings can be more volatile than other financial, especially Life Insurance companies.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy 6) and Hold (6). The consensus would be a Buy. The 12 months stock price is $122.00. This implies a total return of 1.82% with a capital loss of 0.66% and dividends of $2.48% based on a current stock price of $122.81.
See what analysts are saying about this stock on Stock Chase. It is liked but a couple of analysts thought it was expensive. Ryan Vanzo |on Motley Fool thinks this company is a long term buy and hold stock. A writer on Simply Wall Street says this company generally has a higher P/E than other similar companies.. Greg Meckbach on Canadian Underwriter talks about direct-to-consumer in the insurance market. A Gazette contributor on Goodwell Gazette talks about some rankings for this stock.
Intact Financial Corp is a property and casualty insurance company that provides written premiums in Canada. The company distributes insurance under the Intact Insurance brand through a network of brokers and a wholly owned subsidiary, BrokerLink, and directly to consumers through belairdirect. Its web site is here Intact Financial Corp.
The last stock I wrote about was about was Saputo Inc. (TSX-SAP, OTC-SAPIF) ... learn more. The next stock I will write about will be Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF) ... learn more on Friday, July 5, 2019 around 5 pm. Tomorrow on my other blog I will write about Something to Buy July 2019.... learn more on Thursday, July 4, 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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