I own this stock of Metro Inc (TSX-MRU, OTC-MTRAF). I bought this stock in 2004. My total return is 17.31% per year with 15.41% per year from capital gains and 1.90% per year from dividends. Since I bought this stock my dividends have grown by 627% and I am making a yield of 13.58% on my original purchase amount. I paid $5.89 per share and my dividends per share amount to $5.28 or 89.5% of what I paid for this stock.
Also, for the RRSP account, I bought this stock in 2001 and sold it in 2009. I made on this account a total return of 12.36% with 10.81% from capital gains and 1.55% from dividends. In this account my dividends were $2.76 per share for shares I paid $17.84 per share (with 3 way split in 2015, the price was $5.95). The dividends paid are 15.5% of the cost of my shares. I sold this from my RRSP account after I start to take money yearly from this account because of the low dividends.
When I was updating my spreadsheet, I noticed that if you bought shares in the company in 1992 for approximately $1,000 ($1007.25 to be exact) you have bought 1,025 shares. Today, those shares would be worth $69,130.50 and you would have also received $7,384.72 in dividends. This is why you buy dividend growth stocks.
Dividend yields are low (under2%) and they have always been low. The current dividend is 1.51% with 5, 10 and historical yields at 1.46%, 1.57% and 1.46%. The dividend increases have mostly been good (15% or higher). See the chart below. The last dividend increase was in 2019 and it was for 11.1%.
The Dividend Payout Ratios are good. The DPR for EPS for 2019 was 28% with 5 year coverage at 18%. The DPR for CFPS for 2019 is 15% with 5 year coverage also at 15%. The DPR for 2019 for Free Cash Flow is 60% with 5 year coverage at 36%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2019 is 0.15. The Liquidity Ratio for 2019 at 1.11 is low. If you added cash flow after dividends you get 1.64. The Debt Ratio for 2019 is very good at 2.17. The Leverage and Debt/Equity Ratios are also very good at 1.86 and 0.86 respectively.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. Dividends were started in 1995. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 15.27% | 13.07% | 11.50% | 1.57% |
| 2008 | 10 | 15.85% | 16.83% | 15.15% | 1.67% |
| 2003 | 15 | 14.07% | 15.00% | 13.48% | 1.52% |
| 1998 | 20 | 15.78% | 16.97% | 15.25% | 1.72% |
| 1993 | 25 | 19.90% | 19.22% | 17.22% | 2.00% |
| 1989 | 29 | 22.54% | 20.17% | 2.37% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.12, 16.69 and 18.72. The corresponding 10 year ratios are 11.68, 12.78 and 13.88. The corresponding historical ratios are 10.01, 11.71 and 14.58. The current P/E Ratio is 17.13 based on a stock price of $53.11 and 2020 EPS estimate of $3.10. This stock price testing suggests that the stock price is relatively expensive.
I bought this stock in 2001 and 2004. The P/E Ratio for these purchases would have been 15.13 and 10.27. My total return for 2001 was 12.36% per year and for 2004 was 17.31% per year. Although part of the reason for the return for 2001 would be my sale time also, and I sold this stock in 2009. The current P/E Ratio of 17.13 is higher than at both of my purchases.
I get a Graham Price of $40.40. The 10 year low, median, and high median Price/Graham Price Ratios are 0.97, 1.06 and 1.17. The current P/GP Ratio is 1.31 based on a stock price of $53.11. This stock price testing suggests that the stock price is relatively expensive.
I bought this stock in 2001 and 2004. The P/GP Ratio for these purchases would have been 1.00 and 0.96. My total return for 2001 was 12.36% per year and for 2004 was 17.31% per year. The current P/GP Ratio of 1.31 is higher than at both of my purchases.
I get a 10 year median Price/Book Value per Share Ratio of 2.11. The current P/B Ratio is 2.27 based on a Book Value of $5,955, Book Value per Share of $23.41 and a stock price of $53.11. The current ratio is 7.4% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I bought this stock in 2001 and 2004. The P/B Ratio for these purchases would have been 3.20 and 2.00. My total return for 2001 was 12.36% per year and for 2004 was 17.31% per year. The current P/B Ratio of 2.27 is higher than by 2001 purchase only.
I get an historical median dividend yield of 1.46%. The current dividend yield is 1.51% based on a stock price of $53.11 and dividends of $0.80. The current dividends are 3.2% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median dividend yield is 1.57%. The current yield at 1.51% is 4.3% above this. This stock price testing suggests that the stock price is relatively reasonable and above the median.
I bought this stock in 2001 and 2004. The Dividend Yield for these purchases would have been 0.97% and 1.84%. My total return for 2001 was 12.36% per year and for 2004 was 17.31% per year. It is only my 2004 purchase where the yield is higher than the current yield.
The 10 year median Price/Sales (Revenue) Ratio is 0.57. The current P/S Ratio is 0.78 based on 2020 Revenue estimate of $17,222M, Revenue per Share of $67.69 and a stock price of $53.11. The current P/S Ratio is 37% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I bought this stock in 2001 and 2004. The P/S Ratios for these purchases would have been 0.37% and 0.28%. My total return for 2001 was 12.36% per year and for 2004 was 17.31% per year. The P/S Ratios used to be lower than the current ones. The current P/S Ratio is higher than both my stock purchases.
Results of stock price testing is that the stock price is probably reasonable to expensive. The test that shows that the stock price might be reasonable is the historical dividend yield tests. The P/B Ratio test is also showing the stock price as reasonable but above the median, but not by a great deal, only some 7.4%. Some of this testing is showing results better than 2001 purchase.
Is it a good company at a reasonable price? I am pleased with the results of my investment in this stock. I will not be buying more because this stock is over 5% of my portfolio at present. I will continue to hold this stock in my trading account. I know the yield is low, but the increases are quite nice and this helps in pushing up my income every year.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), Hold (7) and Underperform (1). The consensus would be a Hold. The 12 month consensus stock price is $56.27. This implies a total return of 7.46% with 5.95% from capital gains and 1.51% from dividends.
Last year the consensus stock price was $47.23 which was close to the current stock price. However, this stock ended the year at $53.59 and an increase in capital gain of 13.20% rather than a capital loss of 0.23%.
See what analysts are saying on Stock Chase. They think Metro is doing a good job. Kay Ng on Motley Fool says this is a good defensive stock. A writer on Simply Wall Street says that institutions own 44% of this company. A writer on Simply Wall Street says that some insiders are selling. Mostly I see that they are dumping stock options. A writer on Simply Wall Street says the intrinsic value of this company is $59.33 or the company’s share price of $54.31 is about right. Sam Norman on Slater Sentinel says Desjardins reaffirmed a “hold” rating on shares of Metro.
Metro is one of Canada's largest grocery and drugstore operators in Quebec and Ontario, where it operates more than 500 food stores under several banners, including Metro, Metro Plus, Super C, Food Basics, Adonis, and Premiere Moisson, as well as more than 650 drugstores under Brunet, Metro Pharmacy, Drug Basics, and recently acquired Jean Coutu. Its web site is here Metro Inc.
The last stock I wrote about was about was Element Fleet Management Corp (TSX-ENF, OTC-ELEEF) ... learn more. The next stock I will write about will be Bank of Montreal (TSX-BMO, NYSE-BMO) ... learn more on January 3, 2020 around 5 pm. Tomorrow on my other blog I will write about Badger Daylighting.... learn more on January 3, 2020 around 5 pm.
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