Is it a good company at a reasonable price? Currently, I would think that the only reason to buy this company is because of the dividends which seem to be stable and sustainable and they are good. This is called passive income investing. Not what I like to do at the moment as I am into lower dividend yields, but dividend growth. However, it all depends on what you want in your investments. The results of the stock price testing is that the stock price is reasonable and below the median.
I do not own this stock of IGM Financial Inc (TSX-IGM, OTC-IGIFF). I am following this stock because I used to own this stock. The stock was on Mike Higgs' list of dividend growth stocks and on the other Dividend lists at that time. I owned this stock from 2006 to 2011. I sold because I decided to rationalizing my portfolio. Selling ones that did not make it into my core and buying ones that did of the same type.
When I was updating my spreadsheet, I noticed that they have not increased their dividend since 2015. Most of the return is from the dividends. Currently the dividend yield is rather good at 6.35%.
If you had invested in this company in December 2013, for $1,009.62 you would have bought 18 shares at $56.09 per share. In December 2023, after 10 years you would have received $403.18 in dividends. The stock would be worth $630.18. Your total return would have been $1,033.38. This would be a total return of 0.28% per year with 4.60% from capital loss and 4.89% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $56.09 | $1,009.62 | 18 | 10 | $403.20 | $630.18 | $1,033.38 |
The current dividend yield is good with dividend growth non-existent. The current dividend yield is good (5% to 6% ranges) at 6.35%. The 5 and 10 year median dividend yield is also good at 6.04% and 5.97%. The historical median dividend yield is moderate (2% to 4% ranges) at 4.34%. The dividends have not been increased since 2015. Analysts do not expect this to change in the near term.
The Dividend Payout Ratios (DPR) are fine, but it would be nice if they were lower. The DPR for 2023 for Earnings per Share (EPS) is good at 47% with 5 year coverage fine at 60%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is fine at 66% with 5 year coverage at 65%. The DPR for 2023 for Cash Flow per Share (CFPS) is fine at 67% with 5 year coverage at 68%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 78% with 5 year coverage at 79%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 46.68% | 59.65% |
| AEPS | 65.41% | 64.76% |
| CFPS | 66.93% | 68.13% |
| FCF | 78.28% | 79.11% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.29 and currently at 0.28. Because this is a financial, I am also looking at Long Term Debt/Covering Asset Ratio and there are good in 2023 at 0.72. The Liquidity Ratio for 2023 is good at 1.96. The Debt Ratio for 2023 is good at 1.56. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.78 and 1.78.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.29 | 0.28 |
| Lg Term R A | 0.72 | 0.72 |
| Intang/GW | 0.47 | 0.46 |
| Liquidity | 1.96 | 1.96 |
| Liq. + CF | 2.30 | 2.18 |
| Debt Ratio | 1.56 | 1.56 |
| Leverage | 2.78 | 2.78 |
| D/E Ratio | 1.78 | 1.78 |
The Total Return per year is shown below for years of 5 to 33 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 | 0.00% | 9.38% | 2.44% | 6.94% |
| 2013 | 10 | 0.46% | 0.28% | -4.60% | 4.89% |
| 2008 | 15 | 0.79% | 6.09% | -0.08% | 6.17% |
| 2003 | 20 | 4.19% | 6.53% | 0.59% | 5.94% |
| 1998 | 25 | 7.37% | 6.34% | 1.14% | 5.21% |
| 1993 | 30 | 9.97% | 9.66% | 3.82% | 5.85% |
| 1990 | 33 | 9.89% | 16.15% | 7.53% | 8.62% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.31, 9.58 and 12.57. The corresponding 10 year ratios are 9.74, 11.33 and 13.01. The corresponding historical ratios are 9.96, 14.98, and 17.48. The current P/E Ratio is 9.76 based on a stock price of $35.44 and EPS estimate for 2024 of $3.63. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.92, 10.83 and 12.61. The corresponding 10 year ratios are 9.54, 11.38 and 9.54. The current ratio is 9.50 based on a stock price of $35.44 and AEPS estimate for 2023 of $3.73. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $48.67. The 10-year low, median, and high median Price/Graham Price Ratios are 0.84, 0.98 and 1.10. The current ratio is 0.73 based on a stock price of $35.44. The current ratio is below the low ratio of 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 1.91. The current P/B Ratio is 1.26 based on a stock price of $35.44, Book Value of $6,700M and Book Value per Share of $28.22. The current ratio is 34% 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 11.78. The current P/CF Ratio is 11.54 based on Cash Flow per Share estimate for 2024 of $3.07, Cash Flow of $731M and a stock price of $35.44. The current P/CF Ratio is 2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 4.34%. The current dividend yield is 6.35% based on dividends of 2.25% and a stock price of $35.44. This dividend yield is 46% 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 6.26%. The current dividend yield is 6.35% based on dividends of 2.25% and a stock price of $35.44. This dividend yield is 6% above the historical median 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 2.81. The current P/S Ratio is 2.55 based on Revenue estimate for 2023 of $3,305M, Revenue per Share of 13.88 and a stock price of $35.44. The current ratio is 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 relatively reasonable. The 10 year median dividend yield test says this as does the P/S Ratio test. However, a lot of the tests suggest that the stock price is cheap.
When I look at analysts’ recommendations, I find Strong Buy (3) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $41.71 with a high of $37 and low of $35.23. This implies a total return of 24.04% with 17.69% from capital gains and 6.35% from dividends.
On analyst thought this stock on Stock Chase was a buy in 2023, but the latest analyst’s recommendation is a Do Not Buy. Stock Chase gives this stock 4 stars out of 5. Joey Frenette on Motley Fool says to sell this stock as it does not have a lot going for it. This is unusual, as generally speaking, writers on Motley Fool are positive about the stocks they talk about. Adam Othman on Motley Fool thinks you should buy this stock for its dividends. The company put out a press release on Newswire about their fourth quarter of 2023 results.
Simply Wall Street via Yahoo Finance talks about buying this stock for its consistent and sustainable dividends. Simply Wall Street has one warnings of earnings are forecast to decline by an average of 2.3% per year for the next 3 years. Simply Wall Street gives this stock 4 stars out of 5.
IGM Financial is the largest non-bank-affiliated asset manager in Canada. The firm is part of the Power Financial group of companies. IGM has two main operating divisions of asset management (operated through Mackenzie Investments) and wealth management (via its Investors Group Wealth Management subsidiary) that provide investment management products and services. Its web site is here IGM Financial Inc.
The last stock I wrote about was about was TFI International Inc (TSX-TFII, OTC-TFIFF) ... learn more. The next stock I will write about will be Emera Inc (TSX-EMA, OTC-EMRA) ... learn more on Friday, March 8, 2024 around 5 pm. Tomorrow on my other blog I will write about Something to Buy March 2024 .... learn more on Thursday, March 7, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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