I do not own this stock of IA Financial Corp (TSX-IAG, OTC-IDLLF). This was a stock shown as a dividend growth stock on the Canadian All Star List .
When I was updating my spreadsheet, I noticed that there is dramatic difference in total return when you look at total return to the end of 2019 and to the end of May 2020. Generally, they are roughly the same. This stock took off at end of 2019 and in 2019 the stock price went up over 63%. It fell hard in the bear market (56%) and recovered (30%) but not near where it was. It is down 43%.
I noticed also that there was insider buying. There is buying is by CEO and Chairman. The Net Insider buying is at 0.21% of market cap. This is high. You would expect it to be around 0.01%.
The dividend yields are moderate with dividend growth moderate. The dividends have been mostly in the moderate (2% to 4% ranges) during the time I cover this stock which is for 19 years. The current dividend is 4.34%, and is higher than the other yields. The 5, 10 and historical median dividend yields at 2.71%, 2.80% and 2.51%. Since dividend increases were restarted in 2014, they have been in the moderate (8% to 14% ranges). See the chart below. However, the most recent dividends increase for 2020 is lower at 7.8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2019 is 28% with 5 year coverage at 28%. The DPR for CFPS for 2019 cannot be calculated due to a net cash flow, but the 5 year coverage is at 60%. The DPR for Free Cash Flow is 70% with 5 year coverage at 56%. The bad showing for DPR for CF is because of increased liabilities for insurance contracts.
Debt Ratios are fine. Since this is a financial company, I am looking at the Liabilities/Covering Assets Ratio. For 2019 it is good at 0.77. The Liquidity Ratio, which is not very important for financials) is good at 1.78 for 2019. The Debt Ratio for 2019 is 1.09 and is good for a Financial. The Leverage and Debt/Equity Ratios are 2019 are 13.15 and 12.05 and are fine for a financial.
The Total Return per year is shown below for years of 5 to 19 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 | 10.74% | 12.58% | 9.93% | 2.65% |
| 2009 | 10 | 6.06% | 10.88% | 8.28% | 2.60% |
| 2004 | 15 | 10.22% | 9.05% | 6.62% | 2.43% |
| 2000 | 19 | 9.78% | 9.03% | 6.83% | 2.20% |
The Total Return per year is shown below for years of 5 to 19 to the end of May 2020. As you can see, the total return to date is a lot lower than for the total return to the end of last year.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 10.74% | 1.96% | -1.77% | 3.73% |
| 2010 | 10 | 6.06% | 4.26% | 0.92% | 3.34% |
| 2005 | 15 | 10.22% | 5.47% | 2.21% | 3.26% |
| 2000 | 20 | 9.78% | 6.51% | 3.49% | 3.02% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.45, 9.19 and 11.18. The corresponding 10 year ratios are 9.39, 11.31 and 12.43. The corresponding historical ratios are 10.30, 11.56 and 13.14. The current P/E Ratio is 10.35 based on a stock price of $44.72 and 2020 EPS estimate of $4.32. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $74.57. The 10 year low, median, and high median Price/Graham Price Ratios are 0.62, 0.75 and 0.83. The current P/GP Ratio is 0.60 based on a stock price of $44.72. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.11. The current P/B Ratio is 0.78 based on a stock price of $44.72, Book Value of $6,120M and a Book Value per Share of $57.21. The current P/B Ratio is 30% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.85. The current P/CF Ratio is 2.31 based on last 12 months Cash Flow of $2073, Cash Flow per Share of $19.38 and a stock price of $44.72. The current ratio is 61% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap. The last 12 month cash flow is unusually high due to lower contract liabilities and investments gains.
I get an historical median dividend yield of 2.51%. The current dividend yield is 4.34% based on a stock price of $44.72 and dividends of $1.94. The current dividend yield is 73% 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 2.80%. The current dividend yield is 4.34% based on a stock price of $44.72 and dividends of $1.94. The current dividend yield is 55% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.53. The current P/S Ratio is 0.38 based on last 12 months Revenue of $12,676M, Revenue per Share of $118.50 and a stock price of $44.72. 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 probably cheap. The dividend yield tests show the stock price is relatively cheap and this is confirmed by the P/S Ratio test. The other tests are showing the same results. The only problem I see is with the P/CF Ratio test and this cash flow is unusually high for the first quarter of 2020.
Is it a good company at a reasonable price? I think that his is a good company. It is a dividend growth stock and is on the Dividend Aristocrat list. The stock price is currently relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5) and Hold (2). The consensus would be a Buy. The 12 month stock price is $53.40. This implies a total return of $23.75% with 19.41% from capital gains and 4.34% from dividends based on a stock price of $44.72.
There is not much in the way of recent comments on Stock Chase but the ones there are positive. Joey Frenette on Motley Fool says it is a great time to buy this stock. A writer on Simply Wall Street says this stock is selling at a reasonable price. A writer on Simply Wall Street says that this company has a credible dividend history. Megan Harman on Investment Executive talks about the company’s recent acquisitions.
IA Financial Corp is a life and health insurance company. It offers life and health insurance products, savings and retirement plans, mutual funds, securities, auto and home insurance, mortgages, and others. Its web site is here IA Financial Corp.
The last stock I wrote about was about was Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) ... learn more. The next stock I will write about will be Hardwoods Distribution Inc (TSX-HDI, OTC-HDIUF) ... learn more on Monday, June 1, 2020 around 5 pm.
Also, on my book blog I have put a review of the book America by Robert Goodwin learn more...
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