Is it a good company at a reasonable price? Companies with moderate dividend yields and moderate dividend growth are some of the best ones that a dividend growth investor can buy. This one has done well for its shareholders over the years. I think that the stock price is certainly reasonable. Plus, the dividend yield tests are showing the stock price as relatively cheap.
I do not own this stock of IA Financial Corp (TSX-IAG, OTC-IDLLF). This was a stock shown as a dividend growth stock on the Canadian All Star List. See site here.
When I was updating my spreadsheet, I noticed that for the first quarter of 2023 that they made a transition to new IFRS 17 from IFRS 9 Accounting Standards. Some of the information I wanted was hard to find. Some information on the statements seems to have changed a lot in what they are showing and I could not always figure out how to reconcile the new information with old information on statements. So, I may not have continuation of information over 22 years that I have data on this company. Maybe things will be clearer with the 2023 final statements.
If you had invested in this company in December 2012 when this stock was first issued, for $1,004.16 you would have bought 32 shares at $31.38 per share. In December 2022, after 10 years you would have received $507.68 in dividends. The stock would be worth $2,536.64. Your total return would have been $3,044.32.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.38 | $1,004.16 | 32 | 10 | $507.68 | $2,536.64 | $3,044.32 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.08%. The 5, 10 and historical dividend yields are also moderate at 3.19%, 2.89% and 2.69%. The dividends have grown at 12.7% per year over the past 5 years. The last dividend increase was in 2022 and it was for 8%. In 2021, dividends were increased by 28.9%.
The Dividend Payout Ratios (DPR) are fine. The DPR for Earnings per Share (EPS) for 2022 is 34% with 5 year coverage at 30%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 29% with 5 year coverage at 27%. The DPR for 2022 for Cash Flow per Share (CFPS) is 2.7% with 5 year coverage at 11%. The DPR for 2022 for Free Cash Flow (FCF) is 69% with 5 year coverage at 42%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 33.99% | 30.19% |
| AEPS | 29.38% | 27.45% |
| CFPS | 2.72% | 10.59% |
| FCF | 68.71% | 41.87% |
Debt Ratios are fine. The long Term Debt/Covering Asset Ratio for 2022 is 0.81 and is good. The Liquidity Ratio for 2022 is 1.73, but this is not an important ratio for financials. The Debt Ratio for 2022 is 1.09 and is fine for financials.
| Type | Ratio |
|---|---|
| Lg Term | 0.81 |
| Intang/GW | 0.37 |
| Liquidity | 1.73 |
| Liq. + CF | 1.53 |
| Debt Ratio | 1.09 |
| Leverage | 13.31 |
| D/E Ratio | 12.23 |
The Total Return per year is shown below for years of 5 to 22 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 12.70% | 8.73% | 5.79% | 2.94% |
| 2012 | 10 | 10.25% | 12.89% | 9.71% | 3.18% |
| 2007 | 15 | 8.55% | 6.53% | 4.23% | 2.30% |
| 2002 | 20 | 11.04% | 9.89% | 7.20% | 2.70% |
| 2000 | 22 | 10.31% | 8.76% | 6.38% | 2.38% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.03, 9.19 and 11.03. The corresponding 10 year ratios are 7.61, 9.38 and 11.76. The corresponding historical ratios are 10.10, 11.44 and 12.88. The current P/E Ratio is 9.31 based on a stock price of $87.60 and EPS estimate for 2023 of $9.41. The current ratio is between the median and low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $119.56. The 10-year low, median, and high median Price/Graham Price Ratios are 0.54, 0.66 and 0.80. The current P/GP Ratio is 0.73 based on a stock price of $87.60. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.10. The current P/B Ratio is 1.31 based on a stock price of $87.60, Book Value of $6,567M and a Book Value per Share of $63.14. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share estimate for 2023 of $69.70. Since the analysts determined the Book Value differently than me, their implied 10 year median P/B Ratio is 1.09. Their Book Value per Share of $69.70 implies a Book Value of $7,302M and a ratio of 1.26 with a stock price of $87.60. 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.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.70. The current P/CF Ratio is 5.73 based on Cash Flow of $1,603M for the last 12 months, Cash Flow per Share of $15.30 and a stock price of $87.60. The current ratio is 46% 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 2.69%. The current dividend yield is 3.49% based on a stock price of $87.60 and dividends of $3.49%. The current dividend yield is 30% 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 2.89%. The current dividend yield is 3.49% based on a stock price of $87.60 and dividends of $3.49%. The current dividend yield is 21% 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 0.52. The current P/S Ratio is 0.53 based on Revenue of $17,360M for the last 12 months, Revenue per Share of $165.69 and a stock price of $87.60. The current ratio is 1.4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. I calculated the Revenue for the last 12 months as I have done in the past.
However, everyone, including me, calculate the Revenue differently. I cannot figure out what sites are using for Revenue and the only site for Revenue estimates, Yahoo Financial, shows the Revenue going from $17.38B in 2022 to 407M in 2023. The Revenue calculations and estimates make no sense. And, the structure of the income statement for the first quarter of 2023 is very different from quarter 4 of 2022 and past statements.
Results of stock price testing is that the stock price is probably reasonable and may even be cheap. The dividend yield test is showing the stock price as cheap. The P/S Ratio test is showing the stock price as reasonable, but there are problems with Revenue calculations. Most of the testing is showing the stock price as reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (6). The consensus would be a Strong Buy. The 12 month target price of $98.11. This implies a total return of 15.49% with 12.00% from capital gains and 3.49% from dividends.
There are two recommendations on Stock Chase for 2023, one for Top Pick and one a Hold. Stock Chase gives this stock 3 stars out of 5. It is on the Money Sense list ranks as 39. It is on the Dividend Aristocrat list. Joey Frenette on Motley Fool likes this dividend stock. Joey Frenette Motley Fool says he likes IA Financial over Manulife. The company put out a press release on Newswire about their 2022 results. The company put out a news release on Insurance Portal about their first quarter of 2023 results.
Simply Wall Street on Yahoo Finance reviews the dividends on this stock. Simply Wall Street gives this stock 4 stars out of 5. They give out one warning of dividend of 3.49% is not well covered. Although, in the above report on dividends, Simply Wall Street says that the dividends are well covered by earnings.
iA Financial Corp Inc is a life and health insurance company. It offers life and health insurance products, savings and retirement plans, mutual funds, securities, auto and home insurance, mortgages, and others. The company operates and manages its activities according to five main reportable operating segments Individual Insurance, Individual Wealth Management, Group Insurance, Group Savings and Retirement, and U.S Operations. Its web site is here IA Financial Corp.
The last stock I wrote about was about was RB Global Inc (TSX-RBA, NYSE-RBA) ... learn more. The next stock I will write about will be Adentra Inc (TSX-ADEN, OTC- HDIUF) ... learn more on Wednesday, June 7, 2023 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks June 2023.... learn more on Tuesday, June 6, 2023 around 5 pm.
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