Is it a good company at a reasonable price? It does seem to be a good company and has done well in the past for its shareholder. It is a positive that insider bought over the past year, but all their purchases were under $60.00 per share. It is also a positive that the company has restarted dividend increases. A negative is the increase in shares. If you look at the stock chart, the stock is at an all time high and generally speaking it is not wise to buy a stock at its all time high. That is a negative. A lot of my testing is showing that the stock might be expensive.
I do not own this stock of Exchange Income Corp (TSX-EIF, OTC-EIFZF). One of my blogger readers suggested this stock as one to review. There was an interesting article about this stock in the G&M in May 2013. This article suggested that the company had a hefty yield with an acquisition tailwind. This article is no longer available.
When I was updating my spreadsheet, I noticed that all but one of the insiders I follow, bought more shares last year. There was one insider I follow that sold some shares. I also noticed that they are issuing shares and things like Revenue and Revenue per Share have very different growths. Revenue over the past 10 and 5 years have grown by 17.23% and 14.67%, but Revenue per Share has only grown over the past 10 and 5 years by 8.32%, and 6.77%.
If you had invested in this company in December 2014, for $1,020.80 you would have bought 44 shares at $23.20 per share. In December 2024, after 10 years you would have received $985.05 in dividends. The stock would be worth $2,589.40. Your total return would have been $3,574.45. This would be a total return of 16.32% per year with 9.76% from capital gain and 6.57% from dividends. Note that dividend yields have gone down significantly, so future dividends amounts would be lower than occurred in the last 10 years.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $23.20 | $1,020.80 | 44 | 10 | $985.05 | $2,589.40 | $3,574.45 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.66%. The 5 and 10 dividend yields are good (5% to 6% ranges) at 5.26% and 5.96%. The historical median dividend yield is high (7% and above) at 7.18%. The dividend yields of the past are high because this stock used to be an Income Trust company. The dividend growth is low (below 8% per year) at 3.5% per year over the past 5 years. The last dividend increase was in 2023 and it was for 4.76%. Dividends are paid monthly.
The Dividend Payout Ratios (DPR) are too high but are expected to moderate. The DPR for 2024 for Earnings per Share (EPS) is far too high at 106% with 5 year coverage at 117%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 88% with 5 year coverage faro too high at 104%. The DPR for 2024 for Adjusted Free Cash Flow reported by the company (FCF) is too high at 100% with 5 year coverage high at 70%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 30% with 5 year coverage at 31%. The DPR for 2024 for Free Cash Flow (FCF) is fine at 63% with 5 year coverage at 60%. There is no agreement on FCF which in 2025 varied from $199.30M to negative $51.60M.
This stock used to be an income trust company and so had high dividend yields and high Dividend Payout Ratios (DPR). However, analyst expect the DPR to moderate to around 50% over the next couple of years. Dividends in the 40% range and low is best.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 106.02% | 116.99% |
| AEPS | 88.29% | 104.40% |
| FCF Co. | 100.00% | 69.74% |
| CFPS | 29.84% | 31.15% |
| FCF | 63.18% | 60.09% |
The Liquidity Ratios are good, but the company has a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is fine at 0.74 and currently at 0.60. The Liquidity Ratio for 2024 is good at 1.97 and 2.24 currently. The Debt Ratio for 2024 is fine at 1.44 and 1.44 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.26 and 2.26 and currently at 3.30 and 2.30. I like to see these ratios below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.74 | 0.60 |
| Intang/GW | 0.41 | 0.31 |
| Liquidity | 1.97 | 2.24 |
| Liq. + CF | 2.31 | 1.85 |
| Debt Ratio | 1.44 | 1.44 |
| Leverage | 3.26 | 3.30 |
| D/E Ratio | 2.26 | 2.30 |
The Total Return per year is shown below for years of 5 to 21 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 3.53% | 10.52% | 5.66% | 4.86% |
| 2014 | 10 | 4.59% | 16.32% | 9.76% | 6.57% |
| 2009 | 15 | 3.57% | 19.25% | 10.64% | 8.61% |
| 2004 | 20 | 8.26% | 19.97% | 9.94% | 10.04% |
| 2003 | 21 | 34.17% | 14.16% | 10.04% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.8, 20.59 and 23.80. The corresponding 10 year ratios are 13.45, 16.47 and 20.49. The corresponding historical ratios are 13.51, 15.88 and 20.06. The current ratio is 21.85 based on a stock price of $72.20 and EPS estimate for 2025 of $3.31. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 13.82, 17.15 and 19.82. The corresponding 10 year ratios are 10.80, 14.16 and 17.51. The corresponding historical ratios are 12.12, 15.88 and 18.25. The current ratio is 19.36 based on a stock price of $72.20 and EPS estimate for 2025 of $3.73. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $48.14. The 10-year low, median, and high median Price/Graham Price Ratios are 0.81, 1.12 and 1.33. The current ratio is 1.50 based on a stock price of $72.20. The current ratio is above the high ratio of the 10 year median ratios. 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 1.87. The current ratio is 2.62 based on a stock price of $72.20, Book Value of $1,421M and Book Value per Share of $27.61. The current ratio is 40% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2025 of $27.10. This analysis calculates the Book Value differently that I do and, in this case, the 10 year P/B Ratio is 1.83. This implies a ratio of 2.66 based on a stock price of $72.20 and Book Value of $1,395M. this ratio is 46% above the 10 year median 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 6.23. The current ratio is a negative 164 because the 2025 estimate for CFPS for 2025 is a negative $0.44. To me this makes no sense. If we use the last 12 month Cash Flow of $447.63, we get a Cash Flow per Share of $8.70 and a ratio of 8.30 with a stock price of $72.20. This ratio is 33% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 7.18%. The current dividend yield is 3.66% based on dividends of $2.57 and a stock price of $72.20. The current dividend yield is 49% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, I wonder about this test being valid because this stock used to be an income trust and as such had very high dividend yields.
I get a 10 year median dividend yield of 5.96%. The current dividend yield is 3.66% based on dividends of $2.57 and a stock price of $72.20. The current dividend yield is 36% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, I wonder about this test being valid because this stock used to be an income trust and as such had very high dividend yields.
The 10-year median Price/Sales (Revenue) Ratio is 1.10. The current P/S Ratio is 1.21 based on a stock price of $72.20, Revenue estimate for 2025 of $3,060M and Revenue per Share of $59.46. The current ratio is 10% 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 could be reasonable, but maybe expensive. There are problems with the Dividend Yield testing because this stock used to be an Income Trust which had very high dividend yield. The P/S Ratio test, which is a favourite of mine, is showing the stock as reasonable but above the median. However, all the other testing is showing the stock price as relative expensive. You have to wonder if all the other tests are right. I know that analyst’s recommendations is a Strong Buy, but almost all stocks come with that recommendation.
When I look at analysts’ recommendations, I find Strong Buy (7), Buy (5), and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $81.31 with a high of $85.00 and a low of $65.50. This implies a total return of 16.27% with 12.62% from capital gains and 3.66% from dividends based on a current stock price of $72.20.
Some analyst on Stock Chase like this stock, other think it is volatile or risky. Aditya Raghunath on Motley Fool thinks you should buy this stock for passive income. Demetris Afxentiou Motley Fool thinks it is a good stock for getting money from dividends. The company put out a Press Release about their fourth quarter of 2024 via the Globe and Mail. The company put out a Press Release via Morning Star about their second quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this stock and does not like the fact that they are issuing shares. In August 2025, they say that the company increased shares by 8.6%. They go on to say that over the past 12 months the company grew profits by 13%, but the EPS only grew by 8%. Simply Wall Street has two warnings on this stock of dividend of 3.66% is not well covered by earnings or free cash flows; and interest payments are not well covered by earnings.
Exchange Income Corporation is a diversified, acquisition-oriented corporation focused on opportunities in the Aerospace & Aviation and Manufacturing segments. The business plan of the Corporation is to invest in profitable, well-established companies with cash flows operating in niche markets. Its web site is here Exchange Income Corp.
The last stock I wrote about was about was Alimentation Couche-Tard Inc (TSX-ATD, OTC-ANCUF) ... learn more. The next stock I will write about will be ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more on Monday, September 1, 2025 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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Also, on my book blog I have put a review of the book Alone Against the North by Adam Shoalts learn more...
