Sound bite for Twitter and StockTwits is: Dividend Growth Materials. I think that the stock price is relatively expensive. Not a great dividend growth stock as dividend fluctuate a lot. I follow resource and material stocks as they are a large part of the TSX. See my spreadsheet on Barrick Gold Corp.
I own this stock of Barrick Gold Corp (TSX-ABX, NYSE-ABX). This is a big gold mining company that I have followed for years. It was on some dividend growth lists at different times and covered by the Investment Reporter. I bought some of this stock in April 2013 because its stock price had fallen hard. I believed the market over reacted. I just bought 100 shares as I am living off my portfolio and do not have much to invest. I bought another 100 shares in 2016.
When I was updating my spreadsheet, I noticed that I am finally making money on this stock. Last year my total return to the end of March 2019 was 4.76% per year with 3.69% from capital gains and 1.07% from dividends. Today, my total return to the end of March 2020 is 10.25% per year with 9.20% from capital gains and 1.05% from dividends.
The dividend yields are low with dividend growth varying a lot. Dividends have been paid in US$. When you look at the chart of dividend growth in CDN$ remember that it will fluctuate with the currency exchange. The chart below showing values in US$ is the one to use to look at dividend changes. The dividends have gone up, gone down and have been flat.
The dividend yield has mostly been low (below 2%). The current dividend yield is 1.24%. The 5, 10 and historical dividend yields are 1.04%, 1.16% and 0.95%.
The Dividend Payout Ratios (DPR) are fine. Because the dividends are paid in US$ and the company reports in US$, I will look at the DPR in US$ terms. The DPR for 2019 for EPS is 9% with the 5 year coverage at 228%. There has been lots of recent years of EPS losses. Analysts estimates think they will do fine over the short term in positive EPS.
The DPR for CFPS is very good and it has always been with the DPR for 2019 at 7% with 5 year coverage at 4%. The DPR for Free Cash Flow for 2019 is 48% with 5 year coverage at 22%. The Dividend Coverage Ratio is health at 2.07 and 5 year coverage at 4.56.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.16 and this is low and good. The Liquidity Ratio for 2019 is high and good at 2.90 with 5 year median at 2.68. The Debt Ratio for 2019 is high and good at 3.05 with 5 year median much lower but still good at 1.71. The Leverage and Debt/Equity Ratios are fine at 2.07 and 0.68 for 2019 with 5 year median ratios at 2.75 and 1.56.
The Total Return per year is shown below for years of 5 to 32 to the end of 2019 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 2.28% | 15.08% | 14.01% | 1.07% |
| 2009 | 10 | -4.69% | -4.29% | -5.27% | 0.98% |
| 2004 | 15 | -0.13% | 0.05% | -1.22% | 1.27% |
| 1999 | 20 | -0.53% | 1.24% | -0.13% | 1.37% |
| 1994 | 25 | 2.49% | 0.08% | -1.05% | 1.12% |
| 1989 | 30 | 4.47% | 8.35% | 5.68% | 2.67% |
| 1986 | 33 | 9.81% | 10.04% | 6.93% | 3.10% |
The Total Return per year is shown below for years of 5 to 32 to the end of 2019 US$. 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 | 0.00% | 12.55% | 11.58% | 0.97% |
| 2009 | 10 | -6.70% | -6.23% | -7.23% | 1.00% |
| 2004 | 15 | -0.63% | -0.32% | -1.75% | 1.43% |
| 1999 | 20 | 0.00% | 1.83% | 0.25% | 1.58% |
| 1994 | 25 | 2.81% | 0.55% | -0.72% | 1.26% |
| 1989 | 30 | 6.53% | 4.65% | 2.89% | 1.76% |
| 1986 | 33 | 9.81% | 10.27% | 7.17% | 3.09% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.36, 7.16 and 8.95. The corresponding 10 year ratios are 2.01, 2.42 and 2.83. The corresponding Historical ratios are 18.79, 25.95 and 31.57. The current P/E Ratio 23.95 based on a stock price of $31.48 and EPS estimate for 2020 of $1.31 CDN$ ($0.94 US$). This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms.
I get a Graham Price of $21.52. The 10 year low, median, and high median Price/Graham Price Ratios are 0.80, 0.99 and 1.33. The current P/GP Ratio is 1.39 based on a stock price of $31.48. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms.
I get a 10 year median Price/Book Value per Share Ratio of 1.99. The current P/B Ratio is 1.86 based on a Book Value $21,432M, Book Value per Share of $12.05 and a stock price of $22.41. The current ratio is 6.5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in US$ terms. You get a similar result in CDN$ terms.
I get an historical median dividend yield of 0.95%. The current dividend yield is 1.24% based on a stock price of $31.48 and dividend of $0.39 CDN$ ($0.28 US$). The current dividend is 31% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$ terms.
I get a 10 year median dividend yield of 1.15%. The current dividend yield is 1.24% based on a stock price of $22.41 and dividend of $0.28 US). The current dividend is 8.7% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in US$ terms. You get a similar result in CDN$ terms.
The 10 year median Price/Sales (Revenue) Ratio is 2.34. The current P/S Ratio is 3.56 based on 2020 Revenue estimate of $11,188M, Revenue per Share of $6.29 and a stock price of $22.41. The current ratio is 52% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$ terms. You get a similar result in CDN$ terms.
Results of stock price testing is that the stock price is probably expensive. The tests show a number of different results. I like the P/S Ratio the best and it show that the stock price is relatively expensive. The problem with the dividend yield test is that dividends have fluctuated over time and so makes it not a good test. The P/E Ratios are nonsense when there are lots of EPS losses. There are no problems with either the P/GP Test or the P/B Ratio test. So, results are reasonable to expensive.
Is it a good company at a reasonable price? I do not generally recommend any resource stocks. I have little myself, but I have a small amount of this stock. I follow some resource stocks because they make up some 40% of the TSX.
When I look at analysts’ recommendations, I find Strong Buy (7) only. The consensus would be a Strong Buy. The 12 month stock price consensus is $32.10. This implies a total return of 3.21% with 1.97% from capital gains and 1.24% from dividends. A Strong Buy and only 3.21% total return in 12 months do not go together. Such a small gain would imply the stock price is expensive.
See what analysts are saying Stock Chase. There are very mixed views as not everyone likes to have gold. Andrew Walker on Motley Fool thinks this stock is a current attractive buy. A writer on Simply Wall Street says the sentiment around this stock has been positive lately, but there are 4 warnings that give him pause. A writer on Simply Wall Street says that Barrick’s ROE at 5.8% is lower than its peers at 9.9%. BNK Invest on Nasdaq talks about the average analysts target for this stock.
Based in Toronto, Barrick Gold is one of the world's largest gold producers, operating mines in North America, South America, Australia, and Africa. Its web site is here Barrick Gold Corp .
The last stock I wrote about was about was Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more. The next stock I will write about will be Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more on Wednesday, April 15, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividend Growth.... learn more on Tuesday, April 14, 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.
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.
second that sentiment!
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