I own this stock of Toromont Industries Ltd (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.
One of the things I look at, using past data, is dividend yield on original investments after 5 to 30 years. I am also looking at how much of the stock cost is covered by dividends after 5 to 30 years. In the chart below I show the numbers for this stock. For example, if you bought this stock 10 years ago at the median price, you would have a current yield on your original investment of 6.68% and 43% of your original cost would have now been paid by dividends.
| Years | Yield | Cost Cov. |
|---|---|---|
| 5 | 3.46% | 14.25% |
| 10 | 6.68% | 43.32% |
| 15 | 8.57% | 67.88% |
| 20 | 19.53% | 167.87% |
| 25 | 39.01% | 348.74% |
| 30 | 268.14% | 2435.02% |
When I was updating my spreadsheet, I noticed I have done very well with this stock. I have had it for some 13 years and I have a total return of 14.62% per year with 12.27% in Capital Gains and 2.35% in dividends. For the stock I bought 13 years ago I am earnings 6.17% on my original investment.
The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.27%. The 5 year and historical median dividend yields are also low at 1.62% and 1.82%. The 10 year median dividend yield is moderate (2% to 4% ranges) at 2.02%. The dividend growth is moderate (8% to 14% growth) at 12.7% per year for the past 5 years. The most recent dividend increase was in 2020 and it was for 14.8%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS is 39% with 5 year coverage at 33%. The DPR for CFPS is 24% with 5 year coverage at 21%. The DPR for Free Cash Flow is 32% with 5 year coverage at 30%. Site disagree on FCF.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.09. This is very low and good. The Liquidity Ratio for 2020 is 2.36 and the Debt Ratio for 2020 is 2.03. These are also good as anything over 1.50 is good. The Leverage and Debt/Equity Ratios are low and good at 1.97 and 0.97.
The Total Return per year is shown below for years of 5 to 30 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 | 12.70% | 25.00% | 23.10% | 1.89% |
| 2010 | 10 | 12.38% | 18.64% | 16.82% | 1.82% |
| 2005 | 15 | 12.84% | 13.86% | 12.35% | 1.52% |
| 2000 | 20 | 13.34% | 16.98% | 15.10% | 1.88% |
| 1995 | 25 | 14.26% | 17.96% | 15.84% | 2.12% |
| 1990 | 30 | 14.95% | 23.36% | 19.53% | 3.83% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.98, 19.41 and 22.24. The corresponding 10 year ratios are 14.46, 17.47 and 20.10. The corresponding 10 year ratios are 13.04, 15.14 and 18.58. The current P/E Ratio is 25.75 based on a stock price of $97.61 and EPS estimate for 2021 of $3.79. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $41.91. The 10 year low, median, and high median Price/Graham Price Ratios are 1.34, 1.58 and 1.83. The current P/GP Ratio is 2.33 based on a stock price of $97.61. This current ratio is above the high median 10 year P/GP Ratio. 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 3.42. The current P/B Ratio is 4.74 based on a stock price of $97.61, Book Value of $1,699M, and Book Value per Share of $20.60. The current ratio is 39% above the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 15.16. The current P/CF Ratio is 16.69 based on Cash Flow per Share estimate for 2021 of $5.85, Cash Flow of $482M and a stock price of $97.61. The current ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.84%. The current dividend yield is 1.27% based on dividends of $1.24 and a stock price of $97.61. The current dividend yield is 31% above the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 2.02%. The current dividend yield is 1.27% based on dividends of $1.24 and a stock price of $97.61. The current dividend yield is 37% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.38. The current P/S Ratio is 2.12 based on Revenue estimate for 2021 of $3,797M, Revenue per Share of $46.04 and a stock price of $97.61. The current ratio is 53% 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. Both the dividend yield tests point to this as does the P/S Ratio test. Most of the other tests say the same thing.
Is it a good company at a reasonable price? I think the current price is too high. However, I own this stock and I have no intention of selling. Stocks go from being over price to under priced all the time. I am a long term investor, so I might do some buying when my stocks are underpriced, but I do not sell because they are overpriced.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (3) recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $101.22. This implies a total return of 4.97% with 3.70% from capital gains and 1.27% from dividends.
Analysts on Stock Chase like this stock. The last entry for February 2021 says it is a buy at $90.85. Adam Othman thinks you should buy this stock on Motley Fool for its strong steady growth. Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and one risk factor. A writer on Simply Wall Street likes that this company is reinvesting heavily in its business. The blogger Hardbacon talks about the 20 best Canadian companies to invest in for 2021 and this list includes this stock.
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The larger segment by revenue, Equipment Group includes a Caterpillar dealership and rental operation of construction equipment. CIMCO offers solutions for the design, engineering, fabrication, and installation of industrial and recreational refrigeration systems. The company operates primarily in Canada and derives a smaller portion of sales from the United States of America. Its web site is here Toromont Industries Ltd.
The last stock I wrote about was about was Alaris Equity Partners Income Trust (TSX-AD, OTC-ALARF) .... learn more. The next stock I will write about will be Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more on Wednesday, April 14, 2021 around 5 pm. Tomorrow on my other blog I will write about Morgan Housel.... learn more on Tuesday, April 13, 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.
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