I do not own this stock of Genworth MI Canada Inc (TSX-MIC, OTC- GMICF). I was looking for another financial services stock to cover after I stopped covering Onex. This stock is from the TSX Aristocrat Index.
When I was updating my spreadsheet, I noticed that they had great cash flow. They have a number of times given out special dividends. However, EPS have not increased by much. If you look at the 5 and 10 year growth you see growth of 4.38% and 4.07%. However, over the same period shares have declined by 1.53% and 3.01%. So really, EPS has only grown over the past 5 and 10 years by2.85% (4.38%-1.53%) and 1.06% (4.07%-3.01%). Most of the time the yield is moderate, but it has been in the good range at different times in the past.
The dividends have increased every year since inception of the stock about 10 years ago. The dividend increases for the past 10 years is moderate (below 8%) at 7.53% per year. Note that this stock has also given out a number of special dividends over the years.
The dividend yields are moderate with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 6%. The 5, 10 and historical are also in the moderate range (2% to 4% ranges) at 4.72%, 4.53% and 4.53%. Note that this stock was issued in 2009.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2019 is 127% with 5 year coverage at 54%. It is so high because of two special dividends given in 2019. Without the special dividends, the DPR for 2019 would have been 42%. The DPR for CFPS for 2019 is 104% with 5 year coverage at 48%. Note that without the two special dividends in 2019 the DPR for CFPS would be 34%.
Debt Ratios are all good. Since this is a financial, I am looking how Debt/Asset Coverage for 2019 it is 0.42 which is a good ratio. Since this is a financial, Liquidity Ratio is not important, but I calculate it to be 4.40 for 2019. This is very high and good. The Debt Ratio is also high and good at 2.31 for 2019. The Leverage and Debt/Equity Ratios for 2019 are low and good at 1.76 and 0.76.
The Total Return per year is shown below for years of 5 to 10 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 | 7.53% | 14.54% | 8.97% | 5.57% |
| 2009 | 10 | 8.93% | 12.55% | 7.74% | 4.81% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.01, 7.79 and 9.27. The corresponding 10 year ratios are 6.08, 7.76 and 9.33. The corresponding historical ratios are 9.27, 7.73 and 11.62. The current P/E Ratio is 8.31 based on a stock price of $36.00 and 2020 EPS estimate of $4.33. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $64.04. The 10 year low, median, and high median Price/Graham Price Ratios are 0.44, 0.56 and 0.67. The current P/GP Ratio is 0.56 based on a stock price of $36.00. 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 0.91. The current P/B Ratio is 0.86 based on a book value of $3,632, Book Value per Share of $42.09 and a stock price of $36.00. The current P/B Ratio is 6% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.78. The current P/CF Ratio is 5.23 based on last 12 month Cash Flow of $594M. Cash Flow per Share of $6.88 and a stock price of $36.00. The current ratio is 40% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.53%. The current dividend yield is 6.00% based on dividends of $2.16 and a stock price of $36.00. The current yield is 32% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.55%. The current dividend yield is 6.00% based on dividends of $2.16 and a stock price of $36.00. The current yield is 32% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 5.00. The current P/S Ratio is 4.28 based on 2020 Revenue estimate of $526M, Revenue per Share of $8.41 and a stock price of $36.00. The current ratio is 14.5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable. It could be cheap. The P/S Ratio says that the stock price is reasonable and below the median. The dividend yield tests say the stock price is relatively cheap. Except for the P/E Ratio test, which is a good one, this testing is say that the stock price is either reasonable below the median or cheap. Even the P/E Ratio test shows the stock price as relatively reasonable. All the tests are good.
Is it a good company at a reasonable price? This seems like a good financial to invest in. It is a dividend growth company. I do have some concerns about the lack of growth in earnings and revenue.
When I look at analysts’ recommendations, I find Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price of $38.20. This implies a total return of 7.60% with 1.84% from capital gains and 5.76% from dividends.
Analyst on Stock Chase like this company. Stock Chase gives it 3 stars out of 5. Ambrose O'Callaghan on Motley Fool thinks this is a good dividend stock for your TFSA. A writer on Simply Wall Street says dividends are affordable, stable and growing. This report is from 2019 and this site has not more recent reports on this stock. Ben Hobson on Stockopedia says this stock dividend has the yield, growth and safety, which are the three main pillars for dividend investing . This is a new item of Brookfield Business Partners buying a stake in Genworth. The Blogger Dividend Earner has recently blogged about this stock.
Genworth MI Canada Inc is a private residential mortgage insurer, providing mortgage default insurance to mortgage originators and lenders. The company generates income from insurance premiums and investments. Its web site is here Genworth MI Canada Inc.
The last stock I wrote about was about was Alimentation Couche-Tard Inc (TSX-ATD.B, OTC-ANCUF) ... learn more. The next stock I will write about will be Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more on Friday, August 28, 2020 around 5 pm. Tomorrow on my other blog I will write about Gordon Pape.... learn more on Thursday, August 27, 2020 around 5 pm.
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