I own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs’ list. I got shares in this company when Power Corp reorganized and gave out Power Corp Shares to replace Power Financial Shares.
When I was updating my spreadsheet, I noticed the big increase in outstanding shares. This has to do with the take over of Power Financial. I acquired my Power Corp shares because I had to hand in my Power Financial shares for Power Corp shares. The very low interest rates have been had on insurance companies. For this company, the dividend yield has risen, dividend growth is lower, and share price has been rather stagnated.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4%) at 4.88%. The 5 year median dividend yield is good (5% and 6% ranges) at 5.34%. The 10 year and historical median dividend yields are moderate at 4.38% and 2.35%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 is 57% with 5 year coverage at 56%. The DPR for CFPS for 2020 is 11% with 5 year coverage at 9%. The DPR for Free Cash Flow for 2020 is 11% with 5 year coverage at 10%.
Debt Ratios are fine. Because this is a financial (insurance), I look at Long Term Debt/Covering Assets Ratio, which for 2020 is fin at 0.95. The Liquidity Ratio is not important, but for 2020 I calculate one at 2.61. The Debt Ratio is fine for a financial at 1.07.
The Total Return per year is shown below for years of 5 to 33 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 | 5.83% | 5.38% | 0.20% | 5.18% |
| 2010 | 10 | 4.18% | 5.20% | 0.55% | 4.65% |
| 2005 | 15 | 6.82% | 3.41% | -0.53% | 3.94% |
| 2000 | 20 | 9.44% | 6.44% | 2.31% | 4.12% |
| 1995 | 25 | 10.47% | 12.89% | 7.11% | 5.78% |
| 1990 | 30 | 10.63% | 11.61% | 6.85% | 4.76% |
| 1987 | 33 | 10.01% | 10.84% | 6.59% | 4.25% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.67, 11.22 and 12.05. The corresponding 10 year ratios are 9.97, 11.15 and 12.35. The corresponding historical ratios are 10.70, 12.46 and 13.79. The current P/E Ratio is 15.29 based on a stock price of $36.69 and EPS estimate for 2021 of $2.40. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $33.81. The 10 year low, median, and high median Price/Graham Price Ratios are 0.69, 0.74 and 0.82. The current P/GP Ratio is 1.09 based on a stock price of $36.69. The current ratio is above the high median 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 1.07. The current P/B Ratio is 1.73 based on a current book value of $14,334M, Book Value per Share of $21.17 and a stock price of $36.69. The current ratio is 61% above the 10 year 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 2.11. The current P/CF Ratio is 2.46 based on Cash Flow per Share estimate for last 12 months of $14.91, Cash Flow of $10,101M and a stock price of $36.69. The current ratio is 61% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.35%. The current dividend yield is 4.88% based on a stock price of $36.69 and dividends of $1.79. The current yield is 108% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.58%. The current dividend yield is 4.88% based on a stock price of $36.69 and dividends of $1.79. The current yield is 6.5% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.32. The current P/S Ratio is 0.37 based on Revenue estimate for 2021 of $66,951M, Revenue per Share of $98.86 and a stock price of $36.69. The current ratio is 16% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield test show that the stock is reasonable to cheap. The P/S Ratio test says it is reasonable, but above the median. The rest of the test show the stock as expensive.
Is it a good company at a reasonable price? I own this company and intent to keep holding it. At the time I bought Power Financial, it was because the price was better than for Power Corp. The stock price is probably reasonable. The thing is that insurance companies have had a real rough time lately because of very low interest rates. They will do better when we get to more normal interest rates.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2) and Hold (6). The consensus would be a Buy. The 12 month stock price consensus is $38.22. This implies a total return of 9.05%, with 4.17% from capital gains and 4.88% from dividends.
On Stock Chase the last 4 recommendations were 2 buys and 2 sells. Vishesh Raisinghani on Motley Fool thinks it is a good idea to buy this company because of their investment in Wealthsimple. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and list one risk. A writer on Simply Wall Street says there has been insider buying and this is a positive. Brandon Beavis on Brandon Beavis Investing talks about Power Corp starting at 10.33 in his video of How to Build A High-Yield Dividend Portfolio in Canada with 6 Dividend Stocks To Buy (2021).
Power Corporation is an international management and holding company that focuses on financial services in North America, Europe, and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms. Its web site is here Power Corp of Canada.
The last stock I wrote about was about was McCoy Global Inc (TSX-MCB, OTC-MCCRF) ... learn more. The next stock I will write about will be Ag Growth International (TSX-AFN, OTC-AGGZF) ... learn more on Wednesday, May 12, 2021 around 5 pm. Tomorrow on my other blog I will write about Investing in Canada.... learn more on Tuesday, May 11, 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.
No comments:
Post a Comment