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. I have reviewed this stock before in July but it is hard to find stocks with December year ends with the year end results out at this time of the year.
When I was updating my spreadsheet, I noticed earnings are volatile as is to be expected from a General Insurance company. The 12 months stock price is close to the current price. This stock when up almost 42% last year and is up over 9% already this year. It is not wonder analysts expect little growth in the near future.
Dividend yield is in the moderate range (2% to 4% ranges). The current dividend is 2.17% with 5, 10 and historical dividend yields at 2.55%, 2.64% and 2.65% respectively. The dividend growth is moderate (8% to 14% ranges). Growth lately has been 9.63% per year over the past 5 years and the current dividend increase was close at 9.2%, but lower than the last 3 years growth at 9.86%, 9.73% and 9.63% for years of 2017 to 2019.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 is 60% with 5 year coverage at 52%. Analysts expect the DPR to be lower this year at 46%. The DPR for CPFS for 2019 is 38% with 5 year coverage at 35%. The DPR for Free Cash Flow for 2019 is 37% with 5 year coverage at 42%. The Dividend Coverage Ratio for 2019 is 2.73 with 5 year coverage at 2.38.
Debt Ratios are fine. The Claims/Covering Assets Ratio is good at 0.64. The Liquidity Ratio is not very important for insurance companies, but it is 1.53 for 2019. The Debt Ratio at 1.37 is fine for this sort of company. Leverage and Debt/Equity Ratios at 3.69 and 2.69 are also fine for this sort of company.
The Total Return per year is shown below for years of 5 to 15 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 9.63% | 13.34% | 10.86% | 2.47% |
| 2009 | 10 | 9.04% | 17.27% | 14.22% | 3.05% |
| 2004 | 15 | 11.65% | 13.68% | 11.01% | 2.67% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.23, 20.96 and 22.58. The corresponding 10 year ratios are 15.96, 17.31 and 18.66. The corresponding historical ratios are 14.41, 15.57 and 16.73. The current P/E Ratio is 21.24 based on a stock price of $153.16 and $7.21. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $93.57. The 10 year low, median, and high median Price/Graham Price Ratios are 1.17, 1.29 and 1.39. The current P/GP Ratio is 1.64 based on a stock price of $153.16. 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 2.02. The current P/B Ratio is 2.84 based on a stock price of $153.16, Book Value of $7,719M and Book Value per Share of $53.97. The current ratio is 40% 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 2.65%. The current Dividend yield is 2.17% based on dividend of $3.32 and a stock price of $153.16. The current dividend is 18.2% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 2.64%. The current Dividend yield is 2.17% based on dividend of $3.32 and a stock price of $153.16. The current dividend is 17.7% below the 10 year 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 1.54. The current P/S Ratio is 1.89 based on 2020 Revenue estimate of $11.600M, Revenue per Share of $81.11 and a stock price of $153.16. The current ratio is 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 expensive, but just inside expensive territory. For P/E Ratio testing, P/B ratio testing and Dividend Yield testing, expensive is the current ratio or yield is 20% or more above the median ratio. At 40% higher the P/B Ratio is in expensive territory, but for the dividend yield and P/S Ratios they are off at 18.2% 17.7% and 22%, so around the expensive territory cut off.
Is it a good company at a reasonable price? First, I think that this is a good dividend growth stock with moderate dividend yield and moderate dividend growth. The total return over the past 5, 10 and 15 years is 13.34%, 17.27% and 13.68%. This is a general insurance company and so it tends to have some volatility in stock price and earnings, but has produced good long term results. At the moment, I think the stock price is on the expensive side, so it might be one to keep an eye on to buy at some future time when the stock price pulls back.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (5). The consensus would be a Buy. The 12 month stock price is $154.92. This implies a total return 3.33% with 1.16% from capital gains and 2.17% from dividends based on a stock price of $153.16.
See what analysts are saying on Stock Chase. They like this company and say it is a consistent performer. Aditya Raghunath on Motley Fool likes this stock and says it is a steady performer, but analysts do not expect the stock price is rise much further this year. A writer on Simply Wall Street talks about who owns this stock. A writer on Simply Wall Street remarks about analysts stock price being close to current price because they do not expect a good year for this company in 2021. Steven Smith on Modern Reader talks about recent analysts remarks.
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 Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more. The next stock I will write about will be Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more on Wednesday, February 12, 2020 around 5 pm. Tomorrow on my other blog I will write about Warren Buffet.... learn more on Tuesday, February 11, 2020 around 5 pm.
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