I own this stock (TSX-TA). I bought this stock in 1987; I sold some in 2000 and then bought some more in 2009. I have made a total return of 7.45 per year. The portion of dividends is 7.11% and capital gain portion was just 0.34%. The dividend yield was much higher on this stock prior to 1997.
On the insiders trading report, it shows a small amount of insider buying and a small amount of insider selling. The net insider buying at $0.6M. This company is also moving away from options and to Performance Share Ownership Plan (Psop) units, Restricted Share Units and Deferred Share Units. Everyone, including the directors have more of these new types of options than common shares. There are a lot of people with these new type options including CEO, CFO, Officers and others and directors.
There are some 211 institutions that own 53% of the shares of this company. Over the past 3 months they have bought and sold shares. There is a net of buyers, but they have reduced their overall share in this company by 2% during this period.
The 5 year median low and high Price/Earnings Ratios are 17.80 and 23.98. The current P/E ratio is relatively low at 16.11. (Although I think the P/E ratios on this stock are rather high for a utility stock.) I get a Graham Price of $17.39. The low and median difference between the Graham price and the stock price is stock price being 7.9% and 29.8% higher than the Graham Price. Currently, the stock price is 2.8% above the Graham price and this would point to a relatively low stock price.
The 10 year median Price/Book Value Ratio is 1.74 and the current ratio of 1.48 is only 85% of the 10 year median ratio. The current P/B Ratio points to a reasonable stock price. (For the stock price to be low, the current P/B Ratio would have to be just 80% of the 10 year median ratio.) The 5 year median dividend yield is 5.32% and the current yield of 6.49% is some 22% higher. This relatively high dividend yield points to a relatively low stock price.
When I look at analysts’ recommendations I find they include all of Strong Buy, Buy, Hold, Underperform and Sell. The consensus recommendation would be a Hold. One analyst just announced recommendation change from Sell to Hold. The Hold consensus comes with a 12 months stock price of $20.89. One hold analyst gives a 12 months stock price of $21.00. (See my site for information on analyst ratings.)
A number of analysts think that TransAlta is well managed. One analyst said this company was the weakest company in the utilities group. Another analyst said that it is not popular at the moments as it has had some troubles. A number of analysts mentioned the great dividend yield. (It is currently at 6.5%.) A number of analysts thought that it will have trouble growing. The worry is that with Dividend Payout Ratios high the company has not enough money to expand.
I think that the company will get though its problems and be a solid dividend payer in the future. I am holding on to my current shares.
New on April 19, 2012. See someone else’s view of this sock at Student of Value Investing blog.
TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here TransAlta. See my spreadsheet at ta.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, April 12, 2012
Wednesday, April 11, 2012
TransAlta Corp
I own this stock (TSX-TA). I bought this stock in 1987; I sold some in 2000 and then bought some more in 2009. I have made a total return of 7.45 per year. The portion of dividends is 7.11% and capital gain portion was just 0.34%. The dividend yield was much higher on this stock prior to 1997.
Total return over the past 5 years is 0%. The dividend paid per year was 4.6% per year. (You would have had a Capital loss.) The total return over the past 10 years is 4.6%. Dividends were 4.9% per year and the capital loss was 0.3%. The company has had some recent problems and the stock price has been tracking down.
The 5 year median Dividend Payout Ratios are 91.5% for earnings and 31.5% for cash flow. The cash flow one is fine, but the one for earnings is high. The DPR for earnings was fine for 2011 at 88.5%. It is expected to be over 100% in 2013 and is not expected to improve until 2014. You would not expect any dividend increases in the short term.
This stock has never been a dividend growth stock. Generally the dividend yield has been high and the increases few and far between. The growth in dividends has been at 3% and 1.5% over the past 5 and 10 years. Total inflation has been running at 2% and 2.2% over the past 5 and 10 years. For this stock you expect a rather high yield and a low growth dividend. Although, dividend increases should be keeping up with inflation.
As far as growth goes, there has not been much or just none at all for revenue, earnings, cash flow and book value. It looks like there is growth in earnings over the past 5 years, but that is because earnings hit a low point 5 years ago. Growth in earnings over the past 5 years is really probably around 2%.
The current Liquidity Ratios is a bit low at 0.94, but this is typical for this sort of company. The current Debt Ratio is good at 1.59. The current Leverage and Debt/Equity Ratios are fine for this sort of company at 3.61 and 2.27, respectively.
The Return on Equity looks good at 12.7% for the year ending in 2011. However, the ROE on comprehensive income is really low at 1.3%. The current thinking is that if there is a big difference like this in ROE on net income and comprehensive income, then the ROE on net income may not be as good as it looks.
This is an electrical utility company and what you would expect from it is an 8% return with around 5% from dividends and 3% from capital gains. You would expect dividend growth to be at or a bit better than the rate of inflation. This company used to be like this and if it can get over the current problems it might be again. Why you might invest in it is because it could give you solid returns and with low volatility.
I am holding on to my shares at the present time as I feel that it will get over its current problems.
The globe and mail has a couple of articles on this stock. The first article talks about TA’s recent problems. See article at G&M. The second article is a long interview with the new CEO, Dawn Farrell. See article at G&M
TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here TransAlta. See my spreadsheet at ta.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Total return over the past 5 years is 0%. The dividend paid per year was 4.6% per year. (You would have had a Capital loss.) The total return over the past 10 years is 4.6%. Dividends were 4.9% per year and the capital loss was 0.3%. The company has had some recent problems and the stock price has been tracking down.
The 5 year median Dividend Payout Ratios are 91.5% for earnings and 31.5% for cash flow. The cash flow one is fine, but the one for earnings is high. The DPR for earnings was fine for 2011 at 88.5%. It is expected to be over 100% in 2013 and is not expected to improve until 2014. You would not expect any dividend increases in the short term.
This stock has never been a dividend growth stock. Generally the dividend yield has been high and the increases few and far between. The growth in dividends has been at 3% and 1.5% over the past 5 and 10 years. Total inflation has been running at 2% and 2.2% over the past 5 and 10 years. For this stock you expect a rather high yield and a low growth dividend. Although, dividend increases should be keeping up with inflation.
As far as growth goes, there has not been much or just none at all for revenue, earnings, cash flow and book value. It looks like there is growth in earnings over the past 5 years, but that is because earnings hit a low point 5 years ago. Growth in earnings over the past 5 years is really probably around 2%.
The current Liquidity Ratios is a bit low at 0.94, but this is typical for this sort of company. The current Debt Ratio is good at 1.59. The current Leverage and Debt/Equity Ratios are fine for this sort of company at 3.61 and 2.27, respectively.
The Return on Equity looks good at 12.7% for the year ending in 2011. However, the ROE on comprehensive income is really low at 1.3%. The current thinking is that if there is a big difference like this in ROE on net income and comprehensive income, then the ROE on net income may not be as good as it looks.
This is an electrical utility company and what you would expect from it is an 8% return with around 5% from dividends and 3% from capital gains. You would expect dividend growth to be at or a bit better than the rate of inflation. This company used to be like this and if it can get over the current problems it might be again. Why you might invest in it is because it could give you solid returns and with low volatility.
I am holding on to my shares at the present time as I feel that it will get over its current problems.
The globe and mail has a couple of articles on this stock. The first article talks about TA’s recent problems. See article at G&M. The second article is a long interview with the new CEO, Dawn Farrell. See article at G&M
TransAlta is a power generation and wholesale marketing company. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate our biomass, geothermal, wind, hydro, natural gas and coal facilities in order to provide our customers with a reliable, low-cost source of power. Its web site is here TransAlta. See my spreadsheet at ta.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, April 10, 2012
Canam Group Inc 2
I took Easter Monday off from blogging because I never got to take it when I was working. You get a double whammy if you work and have children. Schools and daycares are closed (at least daycares in downtown Toronto are because they are run by unionized workers). I always had to scramble to find someone to look after my son on that day. At least now I do not automatically get stress out by the mere mention of Easter Monday.
I have a US Trading Account. I used to have US stocks, but have not had any for some time. I just have one stock in this account, which is ADR of Barclay’s Bank. Barclay’s Bank has restarted dividend payments so I had a bit of cash there. I today put this money into TD Dow Jones Index (US) –E (TSX- TDB953). This is a no load fund with very low MER. TD makes you agree on purchase to a “minimum holding period”, but it does not tell you what that is.
I finally tracked now the prospectuses of TD Mutual Funds on on their web site. This is no easy task. I could not find them on TD’s site and had to Google “Prospectus TD Mutual Funds” to find them. In the “Part A” they talk about Short-Term Trading and there it says how long you need to hold their funds. Which is 90 days for e-series (what I got) or 60 days for all others but MMF and TD Short Term Investment Class. If you have to agree to this before purchasing, you would think that they would make the information easy to find and not practically impossible to find. Nowhere is there the term “minimum holding period” on their site. I could not find it and Google could not find it.
Ok, let us go to the stock I want to talk about today, which is Canam Group Inc. (TSX-CAM) a stock I bought in November 2011 as a short term investment. I wanted to review it after the December 2011 financials were in. Since I bought shares in this company, they are up 30%. These shares, like the TSX has been going down over the past few days. I will probably hold until they start to pay dividends again. I do not expect this to be a permanent investment.
After my November 2011 blog on this company there was lots of insider buying, $3.3M of it and there was a very little of insider selling. When I blogged before on this stock there had been just minor amounts of insider buying and insider selling. The company has been busy buying back shares. (It is not often when a company buys back stock at good prices.) The company has options, but overall, insiders own lots more shares than options. This is what I like to see.
There are 18 institutions who own some 44% of this stock. Over the past 3 months they have bought and sold, but there have been fewer buyers than sellers. Also, institutions shares have decreased by 14.3% over the past 3 months. This is not a good sign, but then institutions have been known to be herd followers.
The 5 year median low and high Price/Earnings Ratios on this stock are 9.38 and 16.60. The current P/E is 33.93. This is because no one expects much in the way of earnings for this company this year. P/E goes to 12.84 and then to 9.13 compared to expected earnings for 2013 and 2014. However, a current P/E of 33 is high.
I get a current Graham Price of $5.11 and the current stock price of $4.75 is 7% lower. The median difference between the Graham price and stock price is the stock price being some 33% lower than the Graham price. So this shows a relatively current high price.
Then we get into some good news on the share price. The 10 year Price/Book Value Ratio is 1.00. The current P/B Ratio of 0.57 shows a very good price. The good price is shown by the fact that the current P/B Ratio is only 57% of the 10 year median ratio. It is also shown by the fact that the book value of $8.60 is higher than the stock price.
I cannot talk about dividend yield as this company has suspended dividends because of financial difficulties.
When I look at analysts’ recommendations, I find Strong Buy, Hold, Underperform and Sell. It is interesting there is no Buy recommendation. The consensus recommendations would be a Hold. A Hold recommendation comes with a 12 months stock price of $5.12. Analysts talk about the strong balance sheet and high book value (compared to stock price). They also talk about the fact that 60 to 70% of the business is in the US. Everyone thinks that the company has excellent management.
The blogger Value Vestor talks about his investment in this company on his blog entry dated December 2011. The blogger Investing Obtusely has an interesting perspective of this company in his blog of November 2011.
At the moment I will hold on to the stock I have.
Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I have a US Trading Account. I used to have US stocks, but have not had any for some time. I just have one stock in this account, which is ADR of Barclay’s Bank. Barclay’s Bank has restarted dividend payments so I had a bit of cash there. I today put this money into TD Dow Jones Index (US) –E (TSX- TDB953). This is a no load fund with very low MER. TD makes you agree on purchase to a “minimum holding period”, but it does not tell you what that is.
I finally tracked now the prospectuses of TD Mutual Funds on on their web site. This is no easy task. I could not find them on TD’s site and had to Google “Prospectus TD Mutual Funds” to find them. In the “Part A” they talk about Short-Term Trading and there it says how long you need to hold their funds. Which is 90 days for e-series (what I got) or 60 days for all others but MMF and TD Short Term Investment Class. If you have to agree to this before purchasing, you would think that they would make the information easy to find and not practically impossible to find. Nowhere is there the term “minimum holding period” on their site. I could not find it and Google could not find it.
Ok, let us go to the stock I want to talk about today, which is Canam Group Inc. (TSX-CAM) a stock I bought in November 2011 as a short term investment. I wanted to review it after the December 2011 financials were in. Since I bought shares in this company, they are up 30%. These shares, like the TSX has been going down over the past few days. I will probably hold until they start to pay dividends again. I do not expect this to be a permanent investment.
After my November 2011 blog on this company there was lots of insider buying, $3.3M of it and there was a very little of insider selling. When I blogged before on this stock there had been just minor amounts of insider buying and insider selling. The company has been busy buying back shares. (It is not often when a company buys back stock at good prices.) The company has options, but overall, insiders own lots more shares than options. This is what I like to see.
There are 18 institutions who own some 44% of this stock. Over the past 3 months they have bought and sold, but there have been fewer buyers than sellers. Also, institutions shares have decreased by 14.3% over the past 3 months. This is not a good sign, but then institutions have been known to be herd followers.
The 5 year median low and high Price/Earnings Ratios on this stock are 9.38 and 16.60. The current P/E is 33.93. This is because no one expects much in the way of earnings for this company this year. P/E goes to 12.84 and then to 9.13 compared to expected earnings for 2013 and 2014. However, a current P/E of 33 is high.
I get a current Graham Price of $5.11 and the current stock price of $4.75 is 7% lower. The median difference between the Graham price and stock price is the stock price being some 33% lower than the Graham price. So this shows a relatively current high price.
Then we get into some good news on the share price. The 10 year Price/Book Value Ratio is 1.00. The current P/B Ratio of 0.57 shows a very good price. The good price is shown by the fact that the current P/B Ratio is only 57% of the 10 year median ratio. It is also shown by the fact that the book value of $8.60 is higher than the stock price.
I cannot talk about dividend yield as this company has suspended dividends because of financial difficulties.
When I look at analysts’ recommendations, I find Strong Buy, Hold, Underperform and Sell. It is interesting there is no Buy recommendation. The consensus recommendations would be a Hold. A Hold recommendation comes with a 12 months stock price of $5.12. Analysts talk about the strong balance sheet and high book value (compared to stock price). They also talk about the fact that 60 to 70% of the business is in the US. Everyone thinks that the company has excellent management.
The blogger Value Vestor talks about his investment in this company on his blog entry dated December 2011. The blogger Investing Obtusely has an interesting perspective of this company in his blog of November 2011.
At the moment I will hold on to the stock I have.
Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, April 5, 2012
Canam Group Inc
I own this stock (TSX-CAM). I bought this in November 2011 as a short term investment. I wanted to review it after the December 2011 financials were in. Since I bought shares in this company, they are up 30%. These shares, like the TSX has been going down over the past few days. I will probably hold until they start to pay dividends again. I do not expect this to be a permanent investment.
The financial year of 2011 was not good. Revenues increased nicely as they were up some 17% year over year. Earnings and cash flow were negative as expected. If you had been holding this stock over the past 5 or 10 years, you would have probably have lost money as the 5 and 10 year total returns are negative 13% per year and negative 4.6% per year, respectively.
Dividends are paid as and when the company can afford to pay them. In any event the dividend yield is quite low so that they will not make much difference in total return. Dividend yields have been running between 1% and 2%.
The thing that is still solid about this company is good balance sheet. The debt ratios are not quite as good as for 2010, but they are still good. The current Liquidity Ratio is 1.80. This is a good ratio, but not as good as the 5 and 10 year median ratios of 2.28 and 1.96. The current Debt Ratio at 1.68 is still good, but not as good as the 5 and 10 year median ratios of 2.68 and 1.96. These ratios also dipped in the last recession.
The current Leverage and Debt/Equity Ratios are fine at 2.46 and 1.46. These are not as good as the 5 year median ratios of 2.04 and 1.04. (With these ratios lower is better.) However, these ratios also went higher than usual and even higher than the current ratios in the last recession. (That is the recession prior to the current one we are just coming out of.)
It generally takes a while for company’s financials to react after a bear market, then a recession. After the 2000 bear market, this company hit the worse debt ratios in 2003. This time, the bear market started in 2008 and now, in 2011, the debt ratios are the worse they have been.
Analysts expect the company’s revenues, earnings and cash flow all to improve in 2012. Basically, they expect these to improve, but not to be great over the next few years.
There is no point in talking about Return on Equity as there were no earnings. What analysts seem to be expecting is a slow and gradual improvement in the company over the next few years. With the last bear market/recession, the company was doing well in the 5th and 6th year after the recession. If it does the same thing this time, the 5th and 6th years after the recent bear market would be 2013 and 2014.
At the moment I will be holding on to my shares as I can see more capital gain in the future for this company. I am pleased with the current improvement in this company. With the TSX breaking downward out of the narrow band it has been trading in since early March, I have to wonder if we are going to get any more good upward movement until the fall.
I will continue talking about this stock after the Easter Holidays. That will probably be on Tuesday, April 10th, 2012.
Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
The financial year of 2011 was not good. Revenues increased nicely as they were up some 17% year over year. Earnings and cash flow were negative as expected. If you had been holding this stock over the past 5 or 10 years, you would have probably have lost money as the 5 and 10 year total returns are negative 13% per year and negative 4.6% per year, respectively.
Dividends are paid as and when the company can afford to pay them. In any event the dividend yield is quite low so that they will not make much difference in total return. Dividend yields have been running between 1% and 2%.
The thing that is still solid about this company is good balance sheet. The debt ratios are not quite as good as for 2010, but they are still good. The current Liquidity Ratio is 1.80. This is a good ratio, but not as good as the 5 and 10 year median ratios of 2.28 and 1.96. The current Debt Ratio at 1.68 is still good, but not as good as the 5 and 10 year median ratios of 2.68 and 1.96. These ratios also dipped in the last recession.
The current Leverage and Debt/Equity Ratios are fine at 2.46 and 1.46. These are not as good as the 5 year median ratios of 2.04 and 1.04. (With these ratios lower is better.) However, these ratios also went higher than usual and even higher than the current ratios in the last recession. (That is the recession prior to the current one we are just coming out of.)
It generally takes a while for company’s financials to react after a bear market, then a recession. After the 2000 bear market, this company hit the worse debt ratios in 2003. This time, the bear market started in 2008 and now, in 2011, the debt ratios are the worse they have been.
Analysts expect the company’s revenues, earnings and cash flow all to improve in 2012. Basically, they expect these to improve, but not to be great over the next few years.
There is no point in talking about Return on Equity as there were no earnings. What analysts seem to be expecting is a slow and gradual improvement in the company over the next few years. With the last bear market/recession, the company was doing well in the 5th and 6th year after the recession. If it does the same thing this time, the 5th and 6th years after the recent bear market would be 2013 and 2014.
At the moment I will be holding on to my shares as I can see more capital gain in the future for this company. I am pleased with the current improvement in this company. With the TSX breaking downward out of the narrow band it has been trading in since early March, I have to wonder if we are going to get any more good upward movement until the fall.
I will continue talking about this stock after the Easter Holidays. That will probably be on Tuesday, April 10th, 2012.
Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, April 4, 2012
Dividend Paying Stocks and TFSA
A TFSA Account
I was looking at what could possibly be done with a TFSA account and I just thought I would throw this in.
A Model of TFSA Investing
I made a model of investing for TFSA, assuming you were putting in $5,000 a year and got a return of 10% with 7.5% of capital gain and 2.5% of dividends. Dividends were increasing at 9% a year. Dividends were being reinvested. At the end of 12 years you could have $86,061.22 and at the end of 20 years $315,740.56.
I am assuming you are investing in good quality dividend paying stocks.
How realistic is this model?
My long term results on Fortis (TSX-FTS), which I first bought in 1987, are 13.4% per year to the end of 2011. Of this total return, 4.9% is attributable to dividends and 8.5% to capital gain. Dividends are 49% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 9.5%, per year.
My results on Enbridge Inc. (TSX-ENB) that I have had for only 7 years is 20.1% per year to the end of 2011. Of this total return, 3.5% is attributed to dividends and 16.6% to capital gain. Dividends are 17% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 10.8% per year.
I bought Power Financial Corp (TSX-PWF) first in 2001 and more in 2011. My total return to the end of February 2012 is 8.5%. Of this total return 4.4% was attributed to dividends and 4.1% to capital gain. Dividends are 52% of my return. The 10 year median dividend yield is 2.8%. The 10 year dividend growth is 14.47%. (This is mostly life insurance, but they do have some mutual funds. They have done better than Manulife and Sun Life. Like more life insurance companies, they have not raised dividends recently and for this company, since 2009.)
My long term results on Bank of Montreal (TSX-BMO) that I first bought in 1987 are 15.9% per year to the end of 2011. Of this total return, 6.4% is attributable to dividends and 9.5% to capital gains. Dividends are 40% of my return. The 10 year median dividend yield is 3.8%. The 10 year dividend growth is 9.6% per year.
My long term results on Royal Bank (TSX-BY) that I first bought in 1999 is 17.9% per year to the end of 2011. Of this total return, 5.6% is attributable to dividends and 12.3% to capital gains. Dividends are 31% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 11.7% per year.
I have had CDN Tire (CTC.A) for a long time also, some 12 years. I have a return of 10.8% per year to the end of February 2012. Of this total return, 1.9% is attributed to dividends and 8.9% to capital gain. Dividends are 18% of my return. The 10 year median dividend yield is 1.3%. The 10 year dividend growth is
What to do about dividends and other small amounts?
Dividends income will start out low. To reinvest them you can use the DRIP facilities most dividend paying stock have. The blogger My Own Advisor covers DRIPs quite thoroughly, so I am not going to go into how this works. See his site.
Or you can just add the dividends to the amount you want to invest in the following year. I sometimes buy small cap dividend paying stocks for small amounts of money in the TFSA account.
You can also buy Mutual funds. I know banks like to the TD allow small amounts for some of their funds. For example TD Canadian Index – e (TDB900) allows $100 initial and subsequent investment. The subsequent investments can be any amount they just have to be $100 or greater. Say you had $246.28 in your account you could just clear this into the mutual fund. All the low investment mutual funds have low yields and this one has a yield 1.85%. It is a no load and MER is just 0.33%.
If you are just starting out you should buy utilities and banks. You can buy less than a board lot of shares. A board lot is a financial term, usually meaning 100 shares and most stocks are sold in 100 share lots. However, you can buy and sell odd-lots (less than 100 shares). You may not get the best price, but it will not be far off and if you plan to hold on to the shares, this will not be a long term problems.
Markets:
For 5 year periods since 1956, we have had 4 years of TSX negative return. Over 10 years, we only had one period of TSX negative returns since 1956. TSX returns over 10 years range from 8.2% to 203.4%. If you had been including dividends there would have been no period of negative returns. For 15 or 20 years periods the TSX does not even come close to a negative period since 1956.
US had 2 10 year periods of negative returns and also one ending in 2008, I believe, since the 1920’s. The TSX has done better over the last few years than the US market.
You also have secular bear and bull markets. These last around 15 years. We have been in a secular bear market since 2000. (Although there is some arguments that the Canadian market has moved out this secular bear market, but the US has not.) Secular bear markets tend to be volatile and muck around and not make much progress as far as stock prices are concerned.
Secular bull markets have strong upward movements. They also have pull backs in stock prices, but overall the stock prices move up. In both secular bear markets and secular bull markets, you have cyclical bull and bear markets. Cyclical bull and bear markets are a lot shorter in duration than the secular bull and bear markets.
Conclusions:
Depending on when the 10 year period was, you could or could have not have achieved the 10 years goal. However, I think that over a 20 year period you most likely would.
See my spreadsheet at TFSA_div.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I was looking at what could possibly be done with a TFSA account and I just thought I would throw this in.
A Model of TFSA Investing
I made a model of investing for TFSA, assuming you were putting in $5,000 a year and got a return of 10% with 7.5% of capital gain and 2.5% of dividends. Dividends were increasing at 9% a year. Dividends were being reinvested. At the end of 12 years you could have $86,061.22 and at the end of 20 years $315,740.56.
I am assuming you are investing in good quality dividend paying stocks.
How realistic is this model?
My long term results on Fortis (TSX-FTS), which I first bought in 1987, are 13.4% per year to the end of 2011. Of this total return, 4.9% is attributable to dividends and 8.5% to capital gain. Dividends are 49% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 9.5%, per year.
My results on Enbridge Inc. (TSX-ENB) that I have had for only 7 years is 20.1% per year to the end of 2011. Of this total return, 3.5% is attributed to dividends and 16.6% to capital gain. Dividends are 17% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 10.8% per year.
I bought Power Financial Corp (TSX-PWF) first in 2001 and more in 2011. My total return to the end of February 2012 is 8.5%. Of this total return 4.4% was attributed to dividends and 4.1% to capital gain. Dividends are 52% of my return. The 10 year median dividend yield is 2.8%. The 10 year dividend growth is 14.47%. (This is mostly life insurance, but they do have some mutual funds. They have done better than Manulife and Sun Life. Like more life insurance companies, they have not raised dividends recently and for this company, since 2009.)
My long term results on Bank of Montreal (TSX-BMO) that I first bought in 1987 are 15.9% per year to the end of 2011. Of this total return, 6.4% is attributable to dividends and 9.5% to capital gains. Dividends are 40% of my return. The 10 year median dividend yield is 3.8%. The 10 year dividend growth is 9.6% per year.
My long term results on Royal Bank (TSX-BY) that I first bought in 1999 is 17.9% per year to the end of 2011. Of this total return, 5.6% is attributable to dividends and 12.3% to capital gains. Dividends are 31% of my return. The 10 year median dividend yield is 3.3%. The 10 year dividend growth is 11.7% per year.
I have had CDN Tire (CTC.A) for a long time also, some 12 years. I have a return of 10.8% per year to the end of February 2012. Of this total return, 1.9% is attributed to dividends and 8.9% to capital gain. Dividends are 18% of my return. The 10 year median dividend yield is 1.3%. The 10 year dividend growth is
What to do about dividends and other small amounts?
Dividends income will start out low. To reinvest them you can use the DRIP facilities most dividend paying stock have. The blogger My Own Advisor covers DRIPs quite thoroughly, so I am not going to go into how this works. See his site.
Or you can just add the dividends to the amount you want to invest in the following year. I sometimes buy small cap dividend paying stocks for small amounts of money in the TFSA account.
You can also buy Mutual funds. I know banks like to the TD allow small amounts for some of their funds. For example TD Canadian Index – e (TDB900) allows $100 initial and subsequent investment. The subsequent investments can be any amount they just have to be $100 or greater. Say you had $246.28 in your account you could just clear this into the mutual fund. All the low investment mutual funds have low yields and this one has a yield 1.85%. It is a no load and MER is just 0.33%.
If you are just starting out you should buy utilities and banks. You can buy less than a board lot of shares. A board lot is a financial term, usually meaning 100 shares and most stocks are sold in 100 share lots. However, you can buy and sell odd-lots (less than 100 shares). You may not get the best price, but it will not be far off and if you plan to hold on to the shares, this will not be a long term problems.
Markets:
For 5 year periods since 1956, we have had 4 years of TSX negative return. Over 10 years, we only had one period of TSX negative returns since 1956. TSX returns over 10 years range from 8.2% to 203.4%. If you had been including dividends there would have been no period of negative returns. For 15 or 20 years periods the TSX does not even come close to a negative period since 1956.
US had 2 10 year periods of negative returns and also one ending in 2008, I believe, since the 1920’s. The TSX has done better over the last few years than the US market.
You also have secular bear and bull markets. These last around 15 years. We have been in a secular bear market since 2000. (Although there is some arguments that the Canadian market has moved out this secular bear market, but the US has not.) Secular bear markets tend to be volatile and muck around and not make much progress as far as stock prices are concerned.
Secular bull markets have strong upward movements. They also have pull backs in stock prices, but overall the stock prices move up. In both secular bear markets and secular bull markets, you have cyclical bull and bear markets. Cyclical bull and bear markets are a lot shorter in duration than the secular bull and bear markets.
Conclusions:
Depending on when the 10 year period was, you could or could have not have achieved the 10 years goal. However, I think that over a 20 year period you most likely would.
See my spreadsheet at TFSA_div.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, April 3, 2012
BCE Inc 2
I own this stock (TSX-BCE). This was the first stock I bought and I bought some 50 shares in 1982. I added to the shares over time. I also had some BCE shares and still do in my RRSP account, which I did not talk about yesterday. I bought shares for my RRSP account in 1999. If I consider both my accounts and the spin-off and sale of Nortel and Bell Aliant, I have a return of 12.88%, with 7.64% from capital gain and 5.24% from dividends.
(My Total return depends on how quickly I sold off Nortel after I received it and I sold it quite early for the RRSP account, but later for my trading account. I therefore did better in my RRSP account than my trading account.)
When I look at insider trading report I find $24.9M of insider selling and $3.5M insider buying for a net of insider selling at $21.4M. Not only do insiders have things called “options”, but they have Performance-based Restricted Share Units, Restricted Share Units and Share Units. These other units are all shares given to insiders as part of pay. To me they are all options.
When I look at holdings, according to the insider trading report, the CEO has some $5.7M of common shares that he owns. However, he has options that are worth $76M at current stock price. Everyone but directors have more options than shares. The current insider selling is by the CFO and officers of the company.
There are some 536 institutions that own 52% of the shares of this company. Over the past 3 months they have bought and sold shares and now have a few less shares (selling less than 1% of outstanding shares).
I have 5 year median low and high Price/Earnings Ratios of 11.07 and 13.74. The current stock price of $40.08 has a P/E ratio of 12.68. The 5 and 10 year median Price/Earnings Ratios are 12.41 and 12.88. This makes the current price a reasonable one.
I get a Graham Price of $31.27. The low difference between the Graham price and stock price is the stock price 5.3% lower than the Graham Price. The median and high difference between the Graham Price and stock price is the stock price being 14% and 32% higher than the Graham Price. So the current price is not as high as it has been, but it is above a median price.
I get a 10 year median Price/Book Value Ratio of 2.09 and a current P/B Ratio of 2.91. This shows that the current stock price is high. Part of the problem is the decrease in Book Value because of the new accounting rules.
The last test and the most important one is the dividend yield. The current dividend yield is 5.4% and the 5 year median is 5.3%, which is almost 2% lower. This shows that the current price is reasonable or slightly better than the median price over the past 5 years.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. Because there are so many Hold recommendations, the consensus recommendation would be a Hold. The reason for the Hold recommendations seems to be that no one expects the stock price to change much over the next 12 months. There is a worry about future profits due to competition, not only from cable but also from VoIP. (VoIP is voice over internet protocols; think of Skype.)
The Buy recommendations talk about the 5% dividend and think it is a buy and hold for the 5% yield and future growth in dividends. Even the Buy recommendations mention that they do not expect much in capital gain from this stock. They just like the 5% dividend.
This has been a common refrain recently. With interest rates so low, investors are looking for better income and they are buying dividend paying stock for the yield and nothing else. Personally, I like buying dividend paying stock for yield and capital gain. I worry about the future of Telecom company’s earnings because Canadian Telecom rates are so high. If this changes, our Telecom companies will not earn as much or would have to be more efficient. The government seems to be changing the rules for Telecom to allow more competition.
Bell has a friendly takeover of Astral Media (TSX-ACM) in the works and most feel that the deal will close and be good for BCE. There is an article in the G&M on this purchase.
Cash Money has written a January 2012 blog on Canadian Telecoms. The blogger site of dividend stock online has a September 2011 article on Canadian Telecoms.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
(My Total return depends on how quickly I sold off Nortel after I received it and I sold it quite early for the RRSP account, but later for my trading account. I therefore did better in my RRSP account than my trading account.)
When I look at insider trading report I find $24.9M of insider selling and $3.5M insider buying for a net of insider selling at $21.4M. Not only do insiders have things called “options”, but they have Performance-based Restricted Share Units, Restricted Share Units and Share Units. These other units are all shares given to insiders as part of pay. To me they are all options.
When I look at holdings, according to the insider trading report, the CEO has some $5.7M of common shares that he owns. However, he has options that are worth $76M at current stock price. Everyone but directors have more options than shares. The current insider selling is by the CFO and officers of the company.
There are some 536 institutions that own 52% of the shares of this company. Over the past 3 months they have bought and sold shares and now have a few less shares (selling less than 1% of outstanding shares).
I have 5 year median low and high Price/Earnings Ratios of 11.07 and 13.74. The current stock price of $40.08 has a P/E ratio of 12.68. The 5 and 10 year median Price/Earnings Ratios are 12.41 and 12.88. This makes the current price a reasonable one.
I get a Graham Price of $31.27. The low difference between the Graham price and stock price is the stock price 5.3% lower than the Graham Price. The median and high difference between the Graham Price and stock price is the stock price being 14% and 32% higher than the Graham Price. So the current price is not as high as it has been, but it is above a median price.
I get a 10 year median Price/Book Value Ratio of 2.09 and a current P/B Ratio of 2.91. This shows that the current stock price is high. Part of the problem is the decrease in Book Value because of the new accounting rules.
The last test and the most important one is the dividend yield. The current dividend yield is 5.4% and the 5 year median is 5.3%, which is almost 2% lower. This shows that the current price is reasonable or slightly better than the median price over the past 5 years.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. Because there are so many Hold recommendations, the consensus recommendation would be a Hold. The reason for the Hold recommendations seems to be that no one expects the stock price to change much over the next 12 months. There is a worry about future profits due to competition, not only from cable but also from VoIP. (VoIP is voice over internet protocols; think of Skype.)
The Buy recommendations talk about the 5% dividend and think it is a buy and hold for the 5% yield and future growth in dividends. Even the Buy recommendations mention that they do not expect much in capital gain from this stock. They just like the 5% dividend.
This has been a common refrain recently. With interest rates so low, investors are looking for better income and they are buying dividend paying stock for the yield and nothing else. Personally, I like buying dividend paying stock for yield and capital gain. I worry about the future of Telecom company’s earnings because Canadian Telecom rates are so high. If this changes, our Telecom companies will not earn as much or would have to be more efficient. The government seems to be changing the rules for Telecom to allow more competition.
Bell has a friendly takeover of Astral Media (TSX-ACM) in the works and most feel that the deal will close and be good for BCE. There is an article in the G&M on this purchase.
Cash Money has written a January 2012 blog on Canadian Telecoms. The blogger site of dividend stock online has a September 2011 article on Canadian Telecoms.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Monday, April 2, 2012
BCE Inc
I own this stock (TSX-BCE). This was the first stock I bought and I bought some 50 shares in 1982. I bought another 50 shares the following year. After that, I used the DRIP program to purchase more shares with cash and dividends until 1987. I had an odd-lot of shares, so I bought 40 shares to round out the number of shares.
In May 2000, BCE spun off Nortel, I sold some shares in 2005 and then in July 2006 BCE spun off Bell Aliant. I sold off both Nortel and Bell Aliant and lost on both. Nortel was in free fall by the time Bell spun it off. Things like this can occur if you hold a stock for a long period of time. The reason I sold off some of BCE in 2005 was that Bell was not like the original widow and orphan stock it had been. The Telecommunication business was getting more complex and I thought that Bell was overpriced at that point.
Talking all the things that happened into account Quicken calculates my total return since 1987 at 9.3% per year, with 3.6% in capital gain and 5.7% in dividends. If I just look at BCE I get a total return of 16.3% with 11.7% from capital gain and 4.6% from dividends. (I also have some of this stock in my RRSP account since 1999. I did better at the sale on Nortel as I sold it as early as I could.)
Looking at my spreadsheet, I get total return over the past 5 and 10 years at 16.9% and 5.2% per year, respectively. Over the past 5 years, there was 12% in capital gains per year and 4.9% in dividends per year. Dividends were 29% of the total return. Over the past 10 years, there was 1.7% in capital gains per year and 3.5% in dividends per year. Dividends were 68% of the total return. (Most of the stock I follow did better over the past 10 years and poorer over the past 5 years, but this is the opposite.)
BCE has a very uneven history of dividend increases. I have tracked dividends on my spreadsheet since 1992 and most years there were no increases. Dividends were decreased after BCE spun off Nortel. There were a few years of big increases. The 5 and 10 year growth in dividends are 9.2% and 5.5% per year, respectively. Dividend increases have been very good since 2009, with 2010 and 2011 having two increases in each of these years. The most recent increase was this year and increase was for 4.8%.
The 5 year median Dividend Payout Ratios are 71% for earnings and 26% for cash flow. The DPRs for 2011 were 71% for earnings and 33% for cash flow. The 10 year median DPRs are better and lower at 64% for earnings and 21% for cash flow. The current DPRs are at acceptable levels.
For this company, there is little or negative growth over the past 5 and 10 years for revenues, cash flow and book value. There has not been any year over the past 10 were EPS or Cash Flow was negative. The only decent growth is in EPS. EPS has grown at the rate of 5% and 20% over the past 5 and 10 years.
As for debt ratios, the current Liquidity Ratios is low at 0.62, but the company does have decent cash flow. The current Debt Ratio is strong at 1.60. Both of these ratios are lower than the corresponding 5 and 10 year median ratios. The current Leverage and Debt/Equity Ratios are a little high at 3.70 and 2.31 respectively and they are higher than the corresponding 10 year median ratios of 1.78 and 1.95. (Please note that you want the first to debt ratios high and the second two low. See my site for further information on Debt Ratios.)
The Return on Equity for 2011 is very good at 24%, but the ROE based on comprehensive income is quite a bit lower at 17%. (An ROE of 17% is still good.) The 5 year median ROE is 15% and the 5 year median ROE based on comprehensive income is 14.9%, so they are close. (It is hard to know if the difference is due to the new accounting rules or not.)
There probably is room for shareholders to make a decent profit on this company or any telecom company. However, I feel that these companies may have higher risk than is generally acknowledged. I worry because anything I have read suggests that Canada has some of the highest telecom rates in the world. Such a situation can go on for much longer than anyone can image, but it will not go on forever. The government seems to be taking some steps to correct this situation. I am currently holding on to the shares I own which only constitute 1% of my portfolio.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
In May 2000, BCE spun off Nortel, I sold some shares in 2005 and then in July 2006 BCE spun off Bell Aliant. I sold off both Nortel and Bell Aliant and lost on both. Nortel was in free fall by the time Bell spun it off. Things like this can occur if you hold a stock for a long period of time. The reason I sold off some of BCE in 2005 was that Bell was not like the original widow and orphan stock it had been. The Telecommunication business was getting more complex and I thought that Bell was overpriced at that point.
Talking all the things that happened into account Quicken calculates my total return since 1987 at 9.3% per year, with 3.6% in capital gain and 5.7% in dividends. If I just look at BCE I get a total return of 16.3% with 11.7% from capital gain and 4.6% from dividends. (I also have some of this stock in my RRSP account since 1999. I did better at the sale on Nortel as I sold it as early as I could.)
Looking at my spreadsheet, I get total return over the past 5 and 10 years at 16.9% and 5.2% per year, respectively. Over the past 5 years, there was 12% in capital gains per year and 4.9% in dividends per year. Dividends were 29% of the total return. Over the past 10 years, there was 1.7% in capital gains per year and 3.5% in dividends per year. Dividends were 68% of the total return. (Most of the stock I follow did better over the past 10 years and poorer over the past 5 years, but this is the opposite.)
BCE has a very uneven history of dividend increases. I have tracked dividends on my spreadsheet since 1992 and most years there were no increases. Dividends were decreased after BCE spun off Nortel. There were a few years of big increases. The 5 and 10 year growth in dividends are 9.2% and 5.5% per year, respectively. Dividend increases have been very good since 2009, with 2010 and 2011 having two increases in each of these years. The most recent increase was this year and increase was for 4.8%.
The 5 year median Dividend Payout Ratios are 71% for earnings and 26% for cash flow. The DPRs for 2011 were 71% for earnings and 33% for cash flow. The 10 year median DPRs are better and lower at 64% for earnings and 21% for cash flow. The current DPRs are at acceptable levels.
For this company, there is little or negative growth over the past 5 and 10 years for revenues, cash flow and book value. There has not been any year over the past 10 were EPS or Cash Flow was negative. The only decent growth is in EPS. EPS has grown at the rate of 5% and 20% over the past 5 and 10 years.
As for debt ratios, the current Liquidity Ratios is low at 0.62, but the company does have decent cash flow. The current Debt Ratio is strong at 1.60. Both of these ratios are lower than the corresponding 5 and 10 year median ratios. The current Leverage and Debt/Equity Ratios are a little high at 3.70 and 2.31 respectively and they are higher than the corresponding 10 year median ratios of 1.78 and 1.95. (Please note that you want the first to debt ratios high and the second two low. See my site for further information on Debt Ratios.)
The Return on Equity for 2011 is very good at 24%, but the ROE based on comprehensive income is quite a bit lower at 17%. (An ROE of 17% is still good.) The 5 year median ROE is 15% and the 5 year median ROE based on comprehensive income is 14.9%, so they are close. (It is hard to know if the difference is due to the new accounting rules or not.)
There probably is room for shareholders to make a decent profit on this company or any telecom company. However, I feel that these companies may have higher risk than is generally acknowledged. I worry because anything I have read suggests that Canada has some of the highest telecom rates in the world. Such a situation can go on for much longer than anyone can image, but it will not go on forever. The government seems to be taking some steps to correct this situation. I am currently holding on to the shares I own which only constitute 1% of my portfolio.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Friday, March 30, 2012
Manulife Financial Corp 2
I own this stock (TSX-MFC). I invested in this company first in 2005 and then again in 2006, 2009 and 2010. I have lost at the rate of 11% per year. My dividends income was at the rate of 3% per year. Without dividends, my loss would be at 14% per year. My stock has a capital loss of 54% excluding dividends at the end of last month. The latest price shows that my capital loss is 42%.
When I look at insider trading, I find none at all. No insider buying and no insider selling. In fact it looks like insiders are retaining their options. This is a hopeful sign. What, of course, I do not like is that everyone, including directors, has more “options” than shares. Options for this company include not only things actually called options, but Rights Performance Share Units (Psu), Rights Restricted Share Units (Rsu), and Deferred Share Units.
The problem with insider trading reports is that they only consider “options” that are called “options”. However, I look at all free stock that is given to insiders as options. As far as I am concerned, such things as Deferred Share Units are options. Some people call these other “options”, restricted stock awards. See article on this subject from 2003 in Benefits and Pension Monitor magazine.
There are 497 institutions that hold 61% of the shares of this company. They have bought and sold stock over the past 3 months with a net of buyers, but they have reduced their overall exposure to this stock by 2%.
I have 5 year median low and high Price/Earnings Ratios of 13.65 and 33.71. However, P/E’s have been quite high over the past couple of years. I have 10 year median low and high P/E Ratios of 12.49 and 16.31. The 5 year median high is probably not representative of this stock. However, the current P/E Ratio is just 10.67 and this is low and shows a low current stock price.
I get a current Graham Price of $19.05. The low difference between the Graham Price and stock price is the stock price 3.3% lower than the Graham Price. The median difference between the Graham price and stock price is the stock price being 13% higher than the Graham Price. With the current stock price being some 28% lower than the Graham price, it would suggest that the current stock price is low.
I get a 10 year median Price/Book Value Ratio of 1.79. The current P/B Ratio of 1.08 is some 60% of the 10 year median ratio. This relatively low P/B Ratio points to a low current stock price.
Even though the dividend was decreased in 2009 and it has not changed since, the current dividend yield of 3.8% is some 12% higher than the 5 year median dividend yield of 3.4%. This also points to a low current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. A Buy recommendation gives a 12 months stock price of $16. The latest financials presented no surprises and analysts seem to expect insurance company’s environments to improve over the next couple of years.
Analysts feel that the current dividend is safe. No one thinks that this is anything else than a long term buy. Some analysts are still worried about low interest rates. A couple of analysts like Great West Life (TSX-GWO) better.
I am going to hold on to my shares. I think they will recover nicely, but I still have a while to wait. To buy at this point is risky. However, the share price is very good for anyone that can afford the risk. The dividend is nice at 3.8%.
This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife. See my spreadsheet at mfc.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at insider trading, I find none at all. No insider buying and no insider selling. In fact it looks like insiders are retaining their options. This is a hopeful sign. What, of course, I do not like is that everyone, including directors, has more “options” than shares. Options for this company include not only things actually called options, but Rights Performance Share Units (Psu), Rights Restricted Share Units (Rsu), and Deferred Share Units.
The problem with insider trading reports is that they only consider “options” that are called “options”. However, I look at all free stock that is given to insiders as options. As far as I am concerned, such things as Deferred Share Units are options. Some people call these other “options”, restricted stock awards. See article on this subject from 2003 in Benefits and Pension Monitor magazine.
There are 497 institutions that hold 61% of the shares of this company. They have bought and sold stock over the past 3 months with a net of buyers, but they have reduced their overall exposure to this stock by 2%.
I have 5 year median low and high Price/Earnings Ratios of 13.65 and 33.71. However, P/E’s have been quite high over the past couple of years. I have 10 year median low and high P/E Ratios of 12.49 and 16.31. The 5 year median high is probably not representative of this stock. However, the current P/E Ratio is just 10.67 and this is low and shows a low current stock price.
I get a current Graham Price of $19.05. The low difference between the Graham Price and stock price is the stock price 3.3% lower than the Graham Price. The median difference between the Graham price and stock price is the stock price being 13% higher than the Graham Price. With the current stock price being some 28% lower than the Graham price, it would suggest that the current stock price is low.
I get a 10 year median Price/Book Value Ratio of 1.79. The current P/B Ratio of 1.08 is some 60% of the 10 year median ratio. This relatively low P/B Ratio points to a low current stock price.
Even though the dividend was decreased in 2009 and it has not changed since, the current dividend yield of 3.8% is some 12% higher than the 5 year median dividend yield of 3.4%. This also points to a low current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. A Buy recommendation gives a 12 months stock price of $16. The latest financials presented no surprises and analysts seem to expect insurance company’s environments to improve over the next couple of years.
Analysts feel that the current dividend is safe. No one thinks that this is anything else than a long term buy. Some analysts are still worried about low interest rates. A couple of analysts like Great West Life (TSX-GWO) better.
I am going to hold on to my shares. I think they will recover nicely, but I still have a while to wait. To buy at this point is risky. However, the share price is very good for anyone that can afford the risk. The dividend is nice at 3.8%.
This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife. See my spreadsheet at mfc.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, March 29, 2012
Manulife Financial Corp
Yes, I am in an article on April’s issue of Money Sense. The article is “Stocks that Pay You Back”. I had not read this magazine before. It is quite good.
I own this stock (TSX-MFC, NYSE-MFC). At one time life insurance companies were considered to be rather safe investments. This last recession and current very low interest rates has been very hard on life insurance companies, and especially this one.
I invested in this company first in 2005 and then again in 2006, 2009 and 2010. I have lost at the rate of 11% per year. My dividends were at the rate of 3% per year. Without dividends, my loss would be at 14% per year. My stock has a capital loss of 54% excluding dividends.
Manulife cut their dividends in half in 2009. There has been debate on whether this was really necessary. The dividend was much higher than the net income or earnings, but it was not that high in connection with cash flow. The 10 year median Dividend Payout Ratio for Cash Flow is 14%. It would have only gone to 15% with the old dividend. With the new dividend, the DPR for Cash Flow was around 8%.
However, there are more considerations than DPR for Cash Flow. One is debt levels. The other is DPR for earnings. The 10 year median DPR for earnings is 28%. The DPR for earnings in 2012 is expected to be 40% and then 35% in 2013. I do not expect an increase in dividends within the next few years.
I bought my shares first 8 years ago. Even people who have had this stock for 10 years have lost. The 10 year return would be a loss of 2.3% per year. You would have had to hold the stock for at least 12 years to show a profit and then it would be a profit mostly because of dividends.
2011 was a marginally better year for Manulife than the last couple of years. They managed to make a small amount of earnings, but cash flow was down. Revenue was up substantially in 2011, but analysts feel that revenue for 2012 will be similar to 2010.
Cash Flow growth is low over the past 5 year, but good over the past 10 years. The 5 and 10 year growth in cash flow is 2.5% per year and 11.4/% per year, respectively.
There is no growth in book value over the past 5 years. Earnings have been very low and book value has been going down. Book Value is down by 4.8% per year over the past 5 years. It is up just 4% over the past 10 years.
The current Liquidity Ratio is good as it generally is. The current Debt Ratio is 1.08 and this is quite normal for a financial institution. The current Leverage and Debt/Equity Ratios are rather high at 20.63 and 19.52. They are higher than the 5 year median ratios of 14.69 and 13.64.
The Return on Equity ratio is low as the company did not make much money in 2011. The ROE at the end of 2011 was just 1.1%. The 5 year median ROE is 1.9%. They made no money last year so the ROE would have been negative. The ROE based on the Comprehensive Income is a bit better at 2.3%.
I will be holding on to my shares in this company. The share price is already up some 25% in 2012. This reflects the improvement in the company’s finances. I believe it will recover.
This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife. See my spreadsheet at mfc.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I own this stock (TSX-MFC, NYSE-MFC). At one time life insurance companies were considered to be rather safe investments. This last recession and current very low interest rates has been very hard on life insurance companies, and especially this one.
I invested in this company first in 2005 and then again in 2006, 2009 and 2010. I have lost at the rate of 11% per year. My dividends were at the rate of 3% per year. Without dividends, my loss would be at 14% per year. My stock has a capital loss of 54% excluding dividends.
Manulife cut their dividends in half in 2009. There has been debate on whether this was really necessary. The dividend was much higher than the net income or earnings, but it was not that high in connection with cash flow. The 10 year median Dividend Payout Ratio for Cash Flow is 14%. It would have only gone to 15% with the old dividend. With the new dividend, the DPR for Cash Flow was around 8%.
However, there are more considerations than DPR for Cash Flow. One is debt levels. The other is DPR for earnings. The 10 year median DPR for earnings is 28%. The DPR for earnings in 2012 is expected to be 40% and then 35% in 2013. I do not expect an increase in dividends within the next few years.
I bought my shares first 8 years ago. Even people who have had this stock for 10 years have lost. The 10 year return would be a loss of 2.3% per year. You would have had to hold the stock for at least 12 years to show a profit and then it would be a profit mostly because of dividends.
2011 was a marginally better year for Manulife than the last couple of years. They managed to make a small amount of earnings, but cash flow was down. Revenue was up substantially in 2011, but analysts feel that revenue for 2012 will be similar to 2010.
Cash Flow growth is low over the past 5 year, but good over the past 10 years. The 5 and 10 year growth in cash flow is 2.5% per year and 11.4/% per year, respectively.
There is no growth in book value over the past 5 years. Earnings have been very low and book value has been going down. Book Value is down by 4.8% per year over the past 5 years. It is up just 4% over the past 10 years.
The current Liquidity Ratio is good as it generally is. The current Debt Ratio is 1.08 and this is quite normal for a financial institution. The current Leverage and Debt/Equity Ratios are rather high at 20.63 and 19.52. They are higher than the 5 year median ratios of 14.69 and 13.64.
The Return on Equity ratio is low as the company did not make much money in 2011. The ROE at the end of 2011 was just 1.1%. The 5 year median ROE is 1.9%. They made no money last year so the ROE would have been negative. The ROE based on the Comprehensive Income is a bit better at 2.3%.
I will be holding on to my shares in this company. The share price is already up some 25% in 2012. This reflects the improvement in the company’s finances. I believe it will recover.
This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is here Manulife. See my spreadsheet at mfc.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, March 28, 2012
Sun Life Financial Inc 2
I own this stock (TSX-SLF, NYSE-SLF). I first bought this stock in 2000 and some more in 2001, 2003 and 2006. I have made a 1% per year return on this stock. The only reason I have a positive return is because of dividends. I calculate that I have made a return of 4.76% per year in dividends.
When I look at the insider trading report I find very minimal insider buying over the past year and no insider selling. Insiders not only have options they have Units Performance Share Units, Units Restricted Share Units, Units Sun Shares and Deferred Share Units. Everyone, including directors have lots more options than shares (or common stock).
There are some 386 institutions that hold 55% of the shares of this company. Over the last 3 months they have bought and sold these shares and they have very, very marginally reduced their shares outstanding.
I get 5 year median high and low Price/Earnings ratios of 12.40 and 14.47. (10 year median high and low P/E ratios are very close the 5 year ones.) The current P/E ratio of 9.4 therefore shows a very low current stock price.
I get a Graham price of $36.00 and the current stock price of $24.01 is some 33.3% lower. The low and median difference between the Graham Price and the stock price is the stock price being 24.2% lower and 3.9% lower than the Graham Price. By this measure the current stock price is low.
I get a 10 year median Price/Book Value Ratio of 1.25 and a current P/B Ratio of 1.07. The current one is some 85% of the 10 year median and therefore shows the current stock price to be a reasonable one.
The 5 year median dividend yield is 5.02%, which is some 20% lower than the current dividend yield of 6%. This test shows a very low stock price. This is especially so since there have been no dividend increases for a while.
When I look at analysts’ recommendations, they are all over the place with Strong Buy, Buy, Hold, Underperform and Sell recommendations. However, the most recommendations are in the Hold place and the consensus recommendation would be a Hold. Some Hold recommendations come with a 12 months share price at or below the current one. One Buy recommendation gave a 12 months stock price of $27.
No one talks about a dividend increase, at least before 2015. Everyone feels that there are still tough times ahead for Life Insurance companies, especially over the next two years. Some expect improvements as the economy improves and when interest rates are better. One remarks on the fact that the P/B Ratio is close to 1.00. (That is the book value and stock price is almost the same.)
There is an article about Sun Life posting fourth-quarter loss of $525-million at the G&M. The Passive Income Earner talks about Canadian Insurance Companies in December 2011.
I still think that this company will recover and I am holding on to my shares. I realize that it might take them awhile. I expect that recovery is still a couple of years away. To me, I will get a decent return on my money in dividends while I wait for this recovery. I have too much in this company to consider buying any more shares. The purchase of shares in this company would be risky. Any purchase must be considered to be a long term purchase.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at the insider trading report I find very minimal insider buying over the past year and no insider selling. Insiders not only have options they have Units Performance Share Units, Units Restricted Share Units, Units Sun Shares and Deferred Share Units. Everyone, including directors have lots more options than shares (or common stock).
There are some 386 institutions that hold 55% of the shares of this company. Over the last 3 months they have bought and sold these shares and they have very, very marginally reduced their shares outstanding.
I get 5 year median high and low Price/Earnings ratios of 12.40 and 14.47. (10 year median high and low P/E ratios are very close the 5 year ones.) The current P/E ratio of 9.4 therefore shows a very low current stock price.
I get a Graham price of $36.00 and the current stock price of $24.01 is some 33.3% lower. The low and median difference between the Graham Price and the stock price is the stock price being 24.2% lower and 3.9% lower than the Graham Price. By this measure the current stock price is low.
I get a 10 year median Price/Book Value Ratio of 1.25 and a current P/B Ratio of 1.07. The current one is some 85% of the 10 year median and therefore shows the current stock price to be a reasonable one.
The 5 year median dividend yield is 5.02%, which is some 20% lower than the current dividend yield of 6%. This test shows a very low stock price. This is especially so since there have been no dividend increases for a while.
When I look at analysts’ recommendations, they are all over the place with Strong Buy, Buy, Hold, Underperform and Sell recommendations. However, the most recommendations are in the Hold place and the consensus recommendation would be a Hold. Some Hold recommendations come with a 12 months share price at or below the current one. One Buy recommendation gave a 12 months stock price of $27.
No one talks about a dividend increase, at least before 2015. Everyone feels that there are still tough times ahead for Life Insurance companies, especially over the next two years. Some expect improvements as the economy improves and when interest rates are better. One remarks on the fact that the P/B Ratio is close to 1.00. (That is the book value and stock price is almost the same.)
There is an article about Sun Life posting fourth-quarter loss of $525-million at the G&M. The Passive Income Earner talks about Canadian Insurance Companies in December 2011.
I still think that this company will recover and I am holding on to my shares. I realize that it might take them awhile. I expect that recovery is still a couple of years away. To me, I will get a decent return on my money in dividends while I wait for this recovery. I have too much in this company to consider buying any more shares. The purchase of shares in this company would be risky. Any purchase must be considered to be a long term purchase.
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
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