Is it a good company at a reasonable price? I think that the stock price is reasonable, if not cheap. I still have hopes for this stock, but it would appear that I bought it at the wrong time. It did have problems in the past, but it now seems to be recovering.
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 that I have not done well in my investment in this stock. Neither have other long term investors who invested in this stock 15 to 20 years ago. My total return to the end of January 2021, some 17 years, is 3.10% per year with 0.34% from capital gains and 2.76% from dividends. Long term investors of 15 years have made loss 0.71% per year with a capital loss of 3.21% and dividends of 2.50%. Investors of 20 years have made 3.81% per year, with capital gain of 0.74% and dividends of 3.07%.
If you had invested in this company in December 2006, $1023.10 you would have bought 26 shares at $39.35 per share. In December 2021, after 15 years you would have received $157.66 in dividends. The stock would be worth $626.86. Your total return would have been $784.52. Part of the problem was the dividend decrease in 2009.
If you had invested in this company in December 2011, $1009.05 you would have bought 93 shares at $17.15 per share. In December 2021, after 10 years you would have received $748.65 in dividends. The stock would be worth $2,242.23. Your total return would have been $2,990.88.
If you had invested in this company in December 2016, $1171.59 you would have bought 49 shares at $20.74 per share. In December 2021, after 5 years you would have received $431.84 in dividends. The stock would be worth $1,181.39. Your total return would have been $1,613.23.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $39.35 | $1,023.10 | 26 | 15 | $157.66 | $626.86 | $784.52 |
| $17.15 | $1,009.05 | 93 | 10 | $748.65 | $2,242.23 | $2,990.88 |
| $20.74 | $1,171.59 | 49 | 5 | $431.84 | $1,181.39 | $1,613.23 |
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) 4.82%. The 5, 10 and historical median dividend yields are moderate at 4.37%, 3.90% and 3.10%. Dividends are currently being increased at a moderate rate (8% to 14% ranges) at 9.60% per year over the past 5 years. The last increase was in 2021 and it was a 17.9% increase.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 33% with 5 year coverage at 40%. The DPR for Cash Flow per Share for 2021 is 10% with 5 year coverage also at 10%. The DPR for Free Cash Flow for 2021 is 6% with 5 year coverage at 8%.
Debt Ratios are fine. This is a financial stock, so you want to look at Debt/Covering Assets Ratio. For 2021, this ratio is 0.97, which is fine. The Liquidity Ratio is not important, but I calculate it anyway and for 2021 it is 1.26. If you add in Cash Flow after dividends, it is 2.26. Also, the Assets/Current Liability Ratio for 2021 is quite high at 43.75. The Debt Ratio for 2021 is 1.07. This is within the normal range for a financial stock.
The Total Return per year is shown below for years of 5 to 22 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 9.60% | 4.32% | 0.17% | 4.15% |
| 2011 | 10 | 8.45% | 13.26% | 8.31% | 4.95% |
| 2006 | 15 | 3.24% | -0.71% | -3.21% | 2.50% |
| 2001 | 20 | 8.02% | 3.81% | 0.74% | 3.07% |
| 1999 | 22 | 8.36% | 8.77% | 4.46% | 4.31% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.01, 8.27 and 9.52. The corresponding 10 year ratios are 9.13, 11.25 and 12.86. The corresponding historical ratios are 11.22, 13.78 and 15.90. The current P/E Ratio is 6.96 based a stock price of $27.41 and EPS estimate for 2022 of $3.94. The current P/E Ratio is below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $48.72. The 10 year low, median, and high median Price/Graham Price Ratios are 0.58, 0.77 and 0.89. The current P/GP Ratio is 0.49 based on a stock price of $27.41. The current ratio is 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/Book Value per Share Ratio of 1.04. The current P/B Ratio is 1.02 based on a stock price of $27.41, Book Value of $52,072M for last 12 months, and Book Value per Share $26.78. The current P/B Ratio is 1.2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
There is also an estimate for Book Value per Share for 2022. The Book Value per Share estimate for 2022 is $29.20. This gives a P/B Ratio is 0.94 based on a stock price of $27.41, Book Value per Share $29.20, and Book Value of $57,175M. This P/B Ratio of 0.94 is 9% 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 2.30. The current P/CF Ratio is 2.30 based on Cash Flow per Share for last 12 months of $11.92, Cash Flow of $23,155M and a stock price of $27.41. The current ratio is at the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get an historical median dividend yield of 3.10%. The current dividend yield is 4.82% based on dividends of $1.32 and a stock price of $27.41. The current dividend is 55% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.90%. The current dividend yield is 4.82% based on dividends of $1.32 and a stock price of $27.41. The current dividend 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 0.78. The current P/S Ratio is 0.70 based on Revenue estimate for 2022 of $76,125M, Revenue per Share of $39.18 and a stock price 27.41. The current ratio is 9.9% 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 cheap to reasonable. The dividend yield tests say it is cheap and P/S Ratio test says it is reasonable but below the median. The other tests range from cheap to at the median.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (4), Hold (6) and Sell (1). That is quite a range. The consensus would be a Buy. The 12 month stock price is $31.57. This implies a total return of 19.99%, with 15.18% from capital gains and 4.82% from dividends based on a stock price of $27.41.
When I looked at analysts’ recommendations last year, I found Strong Buy (4), Buy (4) and Hold (7). The consensus was a Buy. The 12 month stock price was $27.17. This implies a total return of 13.71%, with 9.20% from capital gains and 4.50% from dividends based on a stock price of $24.88. What happened was a price increase to date at $27.41. That would be a total return of 14.67% with 10.17% from capital gains and 4.50% from dividends. So, they were quite close.
Last year, I thought that the stock price was reasonable. I had not made much money on this stock, but I expected that the stock would do better in the long run.
Analysts on Stock Chase says it is cheap because it had issues. Chris MacDonald on Motley Fool thinks it is a great pick for the long term. Kay Ng on Motley Fool says that Manulife recent results prove it is capable to maintain a safe dividend. The company reports on its fourth quarter via Newswire. A report from Simply Wall Street on Yahoo Finance gives a warning that earnings are expected to drop over the short term for this company.
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 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 Wednesday, February 23, 2022 around 5 pm. Today on my other blog I will write about Saving.... learn more on Tuesday, February 22, 2022 around 5 pm.
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