I do not own this stock of IGM Financial (TSX-IGM, OTC-IGIFF), but I used as 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.
When I was updating my spreadsheet, I noticed that it only has had one increase for 4.7% in the last 5 years. Dividends are flat. However, analysts expect them to start raising the dividends again this year.
The dividend yields are moderate to good with dividend growth low. The dividend yield used to be moderate (2% to 4% ranges) but is currently good (5% and 6% ranges). The current dividend yield is 6.01%. The 5, 10 and historical yields are 5.95%, 5.20% and 3.45%. Dividends have not increased much lately. See chart below. However, analysts expect a 6% raise in dividends this year.
The Dividend Payout Ratios are probably a bit too high. The DPR for 2019 for EPS was 72% with 5 year coverage at 74.5%. The DPR for CFPS for 2019 was76% with 5 year coverage at 73.9%. The DPR for Free Cash Flow for 2019 was 86% with 5 year coverage at 88%. Dividend Coverage Ratio for 2019 was 1.17 with 5 year ratio at 1.13. Note that Morningstar and Wall Street Journal disagree on what the FCF values are. I went with the Morningstar Report from the TD WebBroker.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is low and good at 0.24. The Securitized Mortgage coverage is good at 0.96. The Liquidity Ratio is high and good at 1.98. The Debt Ratio is fine at 1.41, but I like to see this at 1.50. The Leverage and Debt/Equity Ratios are a little high at 3.42 and 2.42, 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. See chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.96, 11.78 and 14.24. The corresponding 10 year Ratios are 12.13, 13.74 and 15.62. The corresponding historical ratios at 13.62, 15.72 and 17.94. The current P/E Ratio is 10.87 based on a stock price of $37.45 and a 2020 EPS estimate of $3.51. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $37.97. The 10 year low, median, and high median Price/Graham Price Ratios are 0.99, 1.03 and 1.06. The current P/GP Ratio is 0.99 based on a stock price of $37.45. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.31. The current P/B Ratio is 2.05 based on a Book Value of $4,349M, Book Value per Share of $18.25 and a stock price of $37.45. The current P/B Ratio is 11% below the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.45%. The current dividend yield is 6.01% based on dividends of $2.25 and stock price of $37.45. The current yield is 74% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 5.20%. The current dividend yield is 6.01% based on dividends of $2.25 and stock price of $37.45. The current yield is 15% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.65. The current P/S Ratio is 2.61 based on 2020 Revenue estimate of $3,413M, Revenue per Share of $14.32 and a stock price of $37.45. The current ratio is 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is cheap to reasonable. This testing is showing that the stock price is relatively low. The dividend yield testing is show as cheap to reasonable and below the median. The P/S Ratio is showing the stock price as cheap. There are no problems with any of the tests.
Is it a good company at a reasonable price? This has long been a good company for investors, but times change. Although there is still a lot of money in Canada in Mutual Funds, new money seems to be going into ETFs. ETFs since coming on the scene has gather a lot of money. You have to wonder about the company’s future, but they are growing their Assets Under Management (AUM). The price is quite good at present.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (6) and Underperform (1). The consensus would be a Hold. The 12 month stock price is $41.67. This implies a total return of 17.28% based on a current stock price of $37.45 with 11.27% from capital gains and 6.01% from dividends.
Last year the 12 month stock price consensus was $36.75. This implied a total return of 14.20% with 7.61% from capital gains and 6.59% from dividends based on a stock price of $34.15. What happened with a total return of 16.25% with 9.66% from capital gains and 9.59% from dividends as new price is $37.45. So last year they were reasonably accurate.
See what analysts are saying on Stock Chase. Competition from EIFs are worrisome. Ambrose O'Callaghan on Motley Fool thinks this is a rock solid dividend stock. A writer on Simply Wall Street says that this company has a P/E normal for its industry. A writer on Simply Wall Street talks about recent good results. Maurice Goldstein on The Enterprise Leader talks about a recent downgrade by TD Securities.
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. Its web site is here IGM Financial.
The last stock I wrote about was about was Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more. The next stock I will write about will be Emera Inc (TSX-EMA, OTC-EMRA) ... learn more on Friday, February 28, 2020 around 5 pm. Tomorrow on my other blog I will write about Lots to do in Toronto.... learn more on Thursday, February 27, 2020 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.
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