I own this stock of Manulife Financial Corp (TSX-MFC, NYSE-MFC). This company was demutualized in 1999 and it turned into a dividend growth stock. I bought this company for the first time in 2005. Analysts liked it and it was a dividend growth stock.
When I was updating my spreadsheet, I noticed I have not done well with this stock. My total return is 2.18% with 2.84% from dividends and a capital loss of 0.66%. Even though the current dividend yield is 4.50%, I am making on my original investment in 2005 dividends yielding that is lower at 3.91%. However, all Life Insurance companies have done poorly because of ultra-low interest rates. I expect, on a long term basis I will do fine with this stock. However, things like low interest rates can go on longer than you can ever imagine. I was aware of this when I decided to keep this stock even though I knew it would have problems because of low interest rates.
The dividend yields are moderate with dividend growth moderate. The dividend yield on this stock is currently moderate (2% to 4% ranges) at 4.50%. The 5, 10 and historical dividend yields are also moderate at 3.79%, 3.67% and 3.05%. The dividend growth for the last 5 years is moderates (8% to 14% ranges) at 10.5% per year. The last dividend increase was for 12% and it was done in 2020.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS is 38% with 5 year coverage at 44%. The DPR for CFPS is 11% with 5 yar coverage at 10%. The DPR for Free Cash Flow is 7% with 5 year coverage at 8%. (It is unusual that the DPR for FCF is better than for CFPS.)
Debt Ratios are fine. Since this is an financial, I am looking at the ratio of Debt/Covering Assets which for 2020 is 1.00. I would prefer this to be under 1.00. The Liquidity Ratio is generally not important for financials, but I calculate it to be fine at 1.42. The Debt Ratio is 1.06 and anything of 1.04 or higher is fine for financials.
The Total Return per year is shown below for years of 5 to 21 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 10.49% | 6.01% | 1.78% | 4.23% |
| 2010 | 10 | 7.97% | 6.49% | 2.82% | 3.67% |
| 2005 | 15 | 4.48% | -0.04% | -2.70% | 2.66% |
| 2000 | 20 | 8.73% | 2.60% | -0.18% | 2.78% |
| 1999 | 21 | 8.55% | 8.68% | 4.37% | 4.32% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.94, 9.81 and 11.68. The corresponding 10 year ratios are 10.32, 12.76 and 14.42. The corresponding historical ratios are 11.22, 13.86 and 16.27. The current P/E Ratio is 8.18 based on a stock price of $24.88 and EPS estimate for 2021 of $3.04. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $41.44. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.78 and 0.91. The current P/GP Ratio is 0.55 based on a stock price of $24.88. 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 1.10. The current P/B Ratio is 0.99 based on a stock price of $24.88, Book Value of $48,713M and a Book Value per Share of $25.11. The current ratio is 10% below the 10 year median 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 2.49. The current P/CF Ratio is 2.41 based on Cash Flow for the last 12 months of $20,048M, Cash Flow per Share of $10.33 and a stock price of $24.88. The current ratio is 3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.05%. The current Dividend Yield is 4.50% based on dividends of $1.12 and a stock price of $24.88. The current dividend yield is 48% 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 3.67%. The current Dividend Yield is 4.50% based on dividends of $1.12 and a stock price of $24.88. The current dividend yield is 23% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.74. The current P/S Ratio is 0.76 based on a stock price of $24.88, Revenue estimate for $2021 of $63,709M and Revenue per Share of $32.84. The current P/S Ratio is 2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I wondered about the Revenue estimates because the estimate for 2021 is 19% below the Revenue for 2020. However, I checked with a Reuters report and they said the same thing with a mean Revenue for 2021 of $64.1B. The high was 73.6B and the low was 54.5B. The Revenue for 2020 was 78,908M and just below the Revenue for 2019. Analyst expect the revenue to grow in 2022 but to just $67,241M.
Results of stock price testing is that the stock price is probably reasonable and maybe cheap. Both dividend yield tests say this stock price is cheap. The dividends were cut in 2010 and it was not until 2017 that dividends were higher than in 2009. This stock price testing suggests that the stock price is relatively reasonable and below the median. The P/S Ratio test says the stock price is reasonable. It is revenue that in the longer term, drives earnings and cash flow (and dividends). Except for the Cash Flow test, the rest of the test says the stock is relatively cheap.
Is it a good company at a reasonable price? I think that the stock price is reasonable. Even though I have not made much money with this company, I do expect to still in the longer term. It is a dividend growth stock and I think a good company. I currently intend to hold on to the shares that I have.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (4) and Hold (7). The consensus would be a Buy. The 12 month stock price is $27.17. This implies a total return of 13.71%, with 9.20% from capital gains and 4.50% from dividends.
Analysts on Stock Chase like this stock and the site gives this stock 5 stars out of 5. Joey Frenette on Motley Fool thinks this stock is cheap, very cheap. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and complains about the debt level and they are right to do so. A writer on Simply Wall Street likes this stock because of rising earnings and lower payout ratios. The Blogger Dividend Earner has recently written about this stock. Pramod Kumar talks about this stock on his site Rise Analytics. Robin Haney on talks about this stock on YouTube.
Manulife provides life insurance and wealth management products and services to individuals and group customers in Canada, the United States, and Asia. Its web site is here Manulife Financial Corp.
The last stock I wrote about was about was Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more. The next stock I will write about will be Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more on Monday, February 22, 2021 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.
Have bin reading some of your interesting blogs on various stocks.
ReplyDeleteAding you to my list of interesting blogs in Canada.
Thanks/Northernlightsinvestment (Sweden)