Is it a good company at a reasonable price? This financial company pays a lot in dividends (and special dividends) and has given shareholders good returns. A high portion of the returns on this company is paid in dividends. It is probably a bit risky, but if you want dividend income this stock has that. It looks like this stock is still selling at a reasonable price.
I do not own this stock of First National Financial Corporation (TSX-FN, OTC-FNLIF). I found this stock looking through dividend stocks on G&M Stock Screener. It is also on the Dividend Aristocrat list, but not on the Money Sense list. This is a new stock for me to cover.
When I was updating my spreadsheet, I noticed this company pays a lot of dividends and it often pays a special dividend.
If you had invested in this company in December 2012, for $1015.20 you would have bought 54 shares at $18.80 per share. In December 2023, after 10 years you would have received $1,225.58 in dividends. The stock would be worth $1.966.68. Your total return would have been $3,192.26. This would be a total return of 15.43% per year with 6.84% from capital gain and 5.59% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $18.80 | $1,015.20 | 54 | 10 | $1,225.58 | $1,966.68 | $3,192.26 |
The current dividend yield is good with dividend growth low with some special dividends. The current dividends are good (5% to 6% ranges) at 6.17%. The 5, 10 and historical dividend yields are also good at 6.01%, 6.49% and 6.70%. The company has given out 8 special dividends in the last 16. The dividend increases are low (below 8% per year) at 5.4% per year over the past 5 years. The last dividend increase was in 2023 and it was for 2.1%. This was a second increase in 2023.
The Dividend Payout Ratios (DPR) are high, but they are giving out special dividends. The DPR for 2023 for Earnings per Share (EPS) is high at 72% with 5 year coverage at 89%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 926% with 5 year coverage acceptable at 48%. The DPR for 2023 for Free Cash Flow does not really matter. The company has chosen high Dividend Payout Ratios, especially considering their special dividends.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 72.44% | 89.31% |
| CFPS | 925.91% | 48.30% |
| FCF | 28.99% | -1084.92% |
Debt Ratios could improve, especially the Debt Ratio. The Long Term Debt/Covering Assets Ratio for 2023 is fine at 0.98 and currently at 0.98. The Long Term Debt/Market Cap Ratio for 2023 is not important. The Liquidity Ratio for 2023 very good at 3.57 and 2.73 currently, but this ratio does not matter. If you added in Cash Flow after dividends, the ratios are fine at 1.53 and 1.76. The Debt Ratio for 2023 is low at 1.02 and 1.02 currently. This ratio matters and I would prefer to see it at least at 1.04 for this financial.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.98 | 0.98 |
| Lg Term R | 19.54 | 19.07 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 3.57 | 2.73 |
| Liq. + CF | 5.07 | 2.89 |
| Debt Ratio | 1.02 | 1.02 |
The Total Return per year is shown below for years of 5 to 16 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 | 7.85% | 13.46% | 4.81% | 8.66% |
| 2012 | 10 | 6.53% | 15.43% | 6.84% | 8.59% |
| 2007 | 15 | 10.50% | 15.53% | 6.63% | 8.90% |
| 2002 | 16 | 10.25% | 14.88% | 6.30% | 8.58% |
The Total Return per year is shown below for years of 5 to 17 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 5.33% | 15.76% | 6.93% | 8.83% |
| 2013 | 10 | 5.73% | 13.68% | 5.44% | 8.24% |
| 2008 | 15 | 4.23% | 20.15% | 9.03% | 11.12% |
| 2003 | 17 | 11.89% | 14.85% | 6.25% | 8.61% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.33, 12.04 and 14.02. The corresponding 10 year ratios are 9.33, 10.99 and 13.61. The corresponding historical ratios are 9.32, 10.14 and 13.31. The current P/E Ratio is 9.65 based on a stock price of $40.87 and EPS of $4.24. The current ratio is between the low and median ratios 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 $33.49. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.35 and 1.66. The current ratio is 1.22 based on a stock price of $40.87. This ratio is between the low and median ratios 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 10-year median Price/Book Value per Share Ratio of 3.86. The current ratio is 3.47 based on a Book Value of $706M, Book Value per Share of $11.77 and a stock price of $40.87. 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 also have a Book Value per Share estimate for 2023 of $11.20. This ratio implies a Book Value of $672M and a ratio of 3.65 with a stock price of $40.87. This ratio is 5% 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 4.65. The current P/CF Ratio is 10.45 based on Cash Flow for the Third Quarter of 2023 of $234.6M, Cash Flow per Share of $3.91 and a stock price of $40.87. The current ratio is 125% 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 6.70%. The current dividend yield is 5.99% based on dividends of $2.45 and a stock price of $40.87. The current dividend yield is 11% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 6.49%. The current dividend yield is 5.99% based on dividends of $2.45 and a stock price of $40.87. The current dividend yield is 8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio 2.83. The current P/S Ratio is 2.72 based on Revenue estimate for 2023 of $900M, Revenue per Share of $15.01 and a stock price of $40.87. The current ratio is 4% 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 probably reasonable. The two dividend yield tests are showing the stock price as reasonable but above the median. The P/S Ratio test is showing the stock price as reasonable and below the median. The other testings are basically showing the stock price as reasonable and below the median.
When I look at analysts’ recommendations, I find Hold (6). The consensus would be a Hold. The 12 month stock price consensus is $42.23 with a high of $45.00 and low of $40.00. The 12 month stock price of $42.23 implies a total return of $9.32% with 5.99% from dividends and 3.33% from capital gains.
The last recommendations are dated 2019 on Stock Chase. However, the analysts seem to like this company. Stock Chase gives this stock 1 star out of 5. Andrew Button on Motley Fool thinks this stock could go parabolic in 2024. Christopher Liew on Motley Fool says this is a fundamentally strong company with an impressive dividend track record. The company put out a press release on their fourth quarter of 2022 results. The company put out a Press Release on their Q3 2023 results.
Simply Wall Street has a report on Yahoo Finance about this company. Simply Wall Street has one warning of debt is not well covered by operating cash flow. Simply Wall Street gives this stock 4 stars out of 5.
First National Financial Corp is the parent company of First National Financial LP, a Canadian originator, underwriter, and servicer of predominantly prime residential and commercial mortgages. Most mortgages originated by First National are funded either by placement with institutional investors or through securitization conduits, in each case with retained servicing. Its web site is here First National Financial Corporation .
The last stock I wrote about was about was Russel Metals Inc (TSX-RUS, OTC-RUSMF) ... learn more. The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more on Wednesday, February 21, 2024 around 5 pm. Tomorrow on my other blog I will write about China and Their Stock Markets.... learn more on Tuesday, February 20, 2023 around 5 pm.
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