Friday, April 17, 2015

Manulife Financial Corp. 2

Sound bite for Twitter and StockTwits is: Stock price is cheap to reasonable. The stock price seems at least reasonable. Insurance companies seem to be making progress lately. They seem to be ready to be dividend growth stocks again. One way to make money is to buy good companies at reasonable prices and hold them for the long term. See my spreadsheet at mfc.htm.

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria. I bought some more stock in October 2005, in April 2009 and in April 2013.

The 5 year low, median and high median Price/Earnings per Share are 10.82, 11.78 and 12.98. These are lower than the 10 year corresponding ratios of 12.40, 14.75 and 15.88. The current P/E Ratio is 12.36 based on a stock price of $22.24 and 2015 EPS of $1.80. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $25.82. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.12 and 1.32. The current P/GP Ratio is 0.86 based on a stock price of $22.24. This stock price test suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.26. The current P/B Ratio is 1.35 a value just 6.8% higher. The current P/B Ratio is based on BVPS of $16.46 and a stock price of $22.24. This stock price test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield 3.54% and this is some 21% higher than the current dividend yield of 2.79%. This stock price test suggests that the stock price is relatively expensive. The historical average dividend yield is 3.27% a value some 14.6% higher than the current dividend yield of 2.79%. This stock price test suggests that the stock price is relatively reasonable.

However, if you look at the historical median dividend yield, it is just 2.20% and this is some 27% below the current dividend yield of 2.79. This stock price test suggests that the stock price is relatively cheap. The current dividend yield is based on a stock price of $22.24 and dividends at $0.62.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month stock price consensus would be $24.60. This implies a total return of 13.40% with 2.79% from dividends and 10.61% from capital gain.

According to Business Wire A. M. Best has put out a special recent report on Canadian Insurance Companies. There is an interesting article from Katia Dmitrieva, Bloomberg News at the Financial Post talking about this company getting rid of its cubicles to save money. There is another interesting article by Barbara Shecter in the Financial Post about Manulife paying DBS Bank $1.2B to sell Life and Health insurance through their Asian Branches.

This is the second of two parts. The first part was posted on Thursday, April 16, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. 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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, April 16, 2015

Manulife Financial Corp.

Sound bite for Twitter and StockTwits is: Back to dividend growth stock. It looks like this stock is returning to a dividend growth stock. I have not yet made much on this stock, but I expect to see it perform better in the future. See my spreadsheet at mfc.htm.

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria. I bought some more stock in October 2005, in April 2009 and in April 2013.

Manulife was the first insurance company to raise dividends since 2008 and in2014 it raised its dividend by 19.2%. However, this was also the only insurance company to cut dividends since 2008 and it cut its dividend by 50% in 2009. This leaves MFC with dividend decline of 6.1% per year over the past 5 years and a dividend growth of 2% per year over the past 10 years.

The Dividend Payout Ratio was 32% for EPS and 9.6% for CFPS in 2014. The 5 year median values are DPR of 32% for EPS and 9.8% for CFPS. The 5 year median figures of DPR for EPS hide a lot. EPS was low or non-existent between 2008 and 2011 and during this period the EPS could not cover dividends.

The dividend yield on this stock has mostly been moderate. The current dividend yield is 2.79%. The 5 year median dividend yield is higher at 3.54%. The historical average and historical median dividend yields are 3.27% and 2.20% respectively.

I have not done well with this stock to date. My total return is 0.18% per year with a capital loss of 2.29% per year with dividends at 2.47% per year. The total returns are fine for the last 5 years, but has a loss over the past 10 years. The 5 year total return is 8.22% per year with 2.89% per year from dividends and 5.34% per year from capital gain. The 10 year total return is a loss of 1.85% per year with dividends at 2.34% per year and a capital loss of 4.19% per year.

Outstanding shares have grown at 1.2% and 1.4% per year over the past 5 and 10 years. Shares have growth due to Stock Options, DRIP and Share Issues and have decreased due to Buy Backs. Revenue has had moderate growth over the past 5 and 10 years. Earnings have good growth over the past 5 years, especially in the last 2 years and no growth over the past 10 years. Cash flow has had no growth over the past 5 years and moderate growth over the past 10 years.

Revenue is up by 6.3% and 7.2% per year over the past 5 and 10 years. Revenue per Share is up by 5.1% and 5.7% per year over the past 5 and 10 years. Another measure of growth for insurance companies is Assets under Management. Here growth is good for the last 5 years and moderate for the last 10 years, with growth at 9.5% per year over the past 5 years and at 7.1% per year over the past 10 years.

EPS is up by 17.03% per year over the past 5 years mainly due to EPS increases over the past 2 years. EPS is flat over the past 10 years.

Cash Flow is down by 1.4% and up by 6.7% per year over the past 5 and 10 years. The CFPS is down by 2.5% and up by 5.2% per year over the past 5 and 10 years.

The Return on Equity was good until 2008. Since then MFC has only had a ROE of 10% or more once and that was last year. However, the ROE for 2014 is not far off 10% at 9.9%. The ROE on comprehensive income has been better than the ROE on Net Income over the past two years. The 2014 ROE on comprehensive income is 18.3%.

When it comes to debt ratios, the Liquidity Ratio is not of much importance. This is the same with banks. The Debt Ratios on insurance companies tend to be low and this company is no different with the Debt Ratio for 2014 at 1.06. Leverage and Debt/Equity Ratios tend to be high on insurance companies, but this company has some of the highest ratios with the 2014 ratios at 17.04 and 16.04 respectively.

This is the first of two parts. The second part will be posted on Friday, April 17, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, April 15, 2015

Sun Life Financial Inc. 2

On my other blog I am today writing about What's Wrong with Finance continue...

Sound bite for Twitter and StockTwits is: stock is cheap to reasonable. Insurance companies have been having a hard time since 2008. They are finally beginning to increase dividends again. You make money long term when you buy good companies when they are cheap. See my spreadsheet at slf.htm.

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). After I sold my CIBC bond in 2000 I had money to buy some stocks so I made a hit list and looked for ones on this list selling at a reasonable price. This stock was selling at a reasonable price at that time.

In 2014 the outstanding shares were increased by 3M shares for stock options. This is a 0.49% increase. This increase is rather normal. These shares have a book value of $83M and this number of shares would be worth $125.8M at the end of 2014.

Over the past year re insider trading, there was $32.2M of insider selling and net insider selling of $31.9M with very little insider buying. There is not much in insider ownership, but the CEO does have shares worth around $2.9M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 8.75, 10.40 and 12.05. The corresponding 10 year values are higher at 12.21, 13.50 and 14.78. The 5 year ratios are rather low. The current P/E Ratio is 12.38 based on a stock price of $39.61 and 2015 EPS estimate of $3.20. I think that this stock testing suggests that the stock price is reasonable. The P/E Ratio would have to be 10.00 or lower for me to think that the stock is cheap via this test.

I get a Graham price of $43.05. The 10 year low, median and high median Price/Graham Price Ratios are 0.78, 0.99 and 1.10. The current P/GP Ratio is 0.92 based on a stock price of $39.61. The theory behind the Graham Price is that if this ratio was 1.00 or less the stock was at a good price. This stock price testing suggests that the stock price is reasonable. However, the Graham Price theory suggests that the stock price is cheap.

I get a 10 year Price/Book Value per Share of 1.35. The current P/B Ratio is 1.54 based on a BVPS of $25.74 and a stock price of $39.61. The current P/B Ratio is some 14% higher than the 10 year median value. This stock price testing suggests that the stock price is reasonable.

The 5 year median dividend yield is 5.02% and the current dividend yield at 3.64% is some 27.5% lower. This initial test suggests that the stock price is expensive. The historical average dividend yield is 4.50% and this is some 19% higher than current dividend yield of 3.64%. The historical median dividend yield is 2.55% and this is a value 42.6% lower than the current dividend yield of 3.64%. The 10 year median dividend yield is 4.18% which is 13% above the current dividend yield of 3.64%.

This testing gives us a mixed bag. The historical median dividend yield is low because the dividend yields started off very low when this stock was initially issued some 15 years ago. The historical median dividend yield is interesting. A median value shows you what the dividend yield is most likely to be and at 2.55% is much lower than the dividend yield has been for the last 7 years or right around 2008 when insurance companies got into trouble.

So it would seem on an historical basis, a dividend yield of 3.64% is rather high. This would suggest that the current stock price is rather cheap.

When I look at analysts' recommendations, I find Strong Buy, buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus recommendations would be a hold. The 12 month stock price consensus is $43.80. This would imply a total return of 14.21% with 10.58% from capital gains and 3.64% from dividends. For this sort of return I would expect Buy recommendations.

This is the second of two parts. The first part was posted on Tuesday, April 14, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

David Pett in a recent Financial Post article, says that Sun Life is posed to raise their dividends for the first time since the financial crisis. There is a recent Motley Fool By Robert Baillieul talking about where you should buy Sun Life or Manulife. On Dakota Financial News Samantha Reynolds talks about recent analysts ratings for Sun Life. According to Business WireA. M. Best has put out a special recent report on Canadian Insurance Companies. You might also be interested in what analysts have to say via Stock Chase.

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.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, April 14, 2015

Sun Life Financial Inc.

Sound bite for Twitter and StockTwits is: 2014 was an improvement, Div raise soon? If you hold stocks over the very long term like I do, there is going to be periods with all stocks where the underlying company will have problems or have to reorganize. This is normal. See my spreadsheet at slf.htm.

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). After I sold my CIBC bond in 2000 I had money to buy some stocks so I made a hit list and looked for ones on this list selling at a reasonable price. This stock was selling at a reasonable price at that time.

As with a number of insurance companies, this company has not raised their dividends for some time. They have kept their dividends level since 2008. Analysts are hopeful that 2015 will be the year when dividends will be raised again. Manulife (TSX-MFC), Power Financial (TSX-PWF) and Great West Lifeco (TSX-GWO) have now raised their dividends, Manulife in 2014 and Power Financial and Great West in 2015.

I have had this stock for 15 years. My total return is 6.03% per year with 2.27% in capital gains and 3.76% in dividends. Over the years I have received some $14.81 in dividends and this is 49% of the price of my shares.

The total return over the past 5 and 10 years is a mixed bag. Over the past 5 years the return is decent, but it is very low over the past 10 years. I consider a decent return to be 8% per year over the longer term. The total return over the past 5 and 10 years is at 8.85% and 1.33% per year. The portion of this return attributable to dividends is 3.21% and 2.96% per year. The portion of this return attributable to capital gain is 5.64% per year over the past 5 years and a loss of 1.64% per year over the past 10 years.

There is no or not much growth over the past 5 and 10 years. However, 2014 was a good year for this company as Revenue, earnings and cash flow was all up. Revenue and Revenue per Share was up in 2014 by 86% and 84% in 2014. Net Income and EPS was up by 87% and 85% in 2014. Cash Flow and CFPS was up by 187% and 186% in 2014.

EPS shows growth of 24.9% per year over the past 5 years, but that is because exactly 5 years ago was an EPS low point. If you look at 5 year running averages, EPS is down by 6.4% per year over the past 5 years. So really, there is not much growth there over the past 5 years.

The Return on Equity has been low since 2008. The ROE for 2014 was 9.3% in 2014 and this has a 5 year median of 8.6%. However, the ROE on comprehensive income has been over 10% for the last 3 years. The comprehensive income ROE for 2014 is at 16.5% and the 5 year median is 10.7%.

This is an insurance company and Liquidity Ratios are not much important, Debt Ratio will be low and Leverage and Debt/Equity Ratios will be high. The Debt Ratio is 1.09 and this is good for an insurance company. The Leverage and Debt/Equity Ratios are 11.84 and 10.84 and are rather normal or a bit low for an insurance company. These ratios often depend on the industry a company is in and so it is important to compare them to similar companies.

This is the first of two parts. The second part will be posted on Wednesday, April 15, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, April 13, 2015

BCE Inc. 2

On my other blog I am today writing about Shorting Canada continue...

Sound bite for Twitter and StockTwits is: Good Dividend; Maybe expensive. Most of my stock price testing shows this stock to be on the expensive side. However, it may not be expensive looking at the dividend yields. See my spreadsheet at bce.htm.

I own this stock of BCE Inc. (TSX-BCE, NYSE-BCE). This is one of first stocks I bought, which was in 1982. At that time is was called an orphan and widow stock. It is not easy to figure out what I have earned on this stock because it has spun off shares for Nortel and Bell Aliant. The annoying thing with their spin offs is you always end up with an odd number of shares.

The 5 year low, median and high Price/Earnings per Share Ratios are 11.98, 13.36 and 14.75. These are not much different from the 10 year corresponding values of 11.81, 12.92 and 14.25. The current P/E Ratio is 16.73 based on a stock price of $58.88 and 2015 EPS estimate of $3.22. This stock price testing would suggest that the stock price is relatively expensive.

I get a Graham Price of $30.71. The 10 year low, median and high median Price/Graham Price Ratios are 1.04, 1.23 and 1.35. The current P/GP Ratio is 1.75 based on a stock price of $53.88. This stock price testing would suggest that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.04. The current P/B Ratio at 4.14 is some 103% higher. The current P/B Ratio is based on a BVPS of $13.02 and a stock price of $53.88. This stock price testing would suggest that the stock price is relatively expensive. The problem with BV is that it has been declining recently.

The only section were the stock price might be showing as reasonable is in comparison with the dividend yield. The current dividend yield is 4.83%. The 5 year median dividend yield is 5.19%, a value just 7% higher. The 10 year median dividend yield is 5.17 and the 15 year dividend yield is 4.67%. This could suggest that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The most recommendations are a Hold, with a few less Buy recommendations. The consensus recommendation would be a Hold. The 12 month stock price is $55.80 and with a starting stock price of $53.88, this will mean a total return of 8.39% with 3.56% from capital gains and 4.83% from dividends.

The Motley Fool gives 3 reasons to buy BCE. Some analysts think that BCE could buy Manitoba Telecom (TSX-MBT). This Motley Fool article talks about a possible MBT buyout. This Markets Wired article talks about BCE's 2014 reporting and recent analysts' recommendation upgrades.

This is the second of two parts. The first part was posted on Friday, April 10, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, April 10, 2015

BCE Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. I have done well over the years, but this stock is currently a very small percentage of my portfolio when in the past it was a big percentage. It is one of 3 stocks I started out with. I am not as interested in Telecom stocks as I used to be. Telecom's seem to be making money currently, but you have to wonder if this will last. See my spreadsheet at bce.htm.

I own this stock of BCE Inc. (TSX-BCE, NYSE-BCE). This is one of first stocks I bought, which was in 1982. At that time is was called an orphan and widow stock. It is not easy to figure out what I have earned on this stock because it has spun off shares for Nortel and Bell Aliant. The annoying thing with their spin offs is you always end up with an odd number of shares.

This is considered to be a dividend growth stock. The dividends have grown by 9% and 7.3% per year over the past 5 and 10 years. However, there have been many years in the past history of this stock when the dividends have not increased. In fact there has been past stretches with no dividend growth at all.

When I first bought this stock in 1982, dividends were yielding around 6% and the increases were between 1 and 3% per year. I cannot reconcile yet my old historical prices for BCE with historical prices given for BCE stock by websites. The Nortel spin-off gave basically a 30% to 70% split of BCE and Nortel, but dividends for BCE only decreased by just under 12%.

The Dividend Payout Ratio for 2014 for EPS is 82% and the CFPS is 31%. The 5 year median DPR for EPS is 71% and for CFPS is 30%.

I have been tracking my shares in Quicken since 1987. Since then I have a total return of 9.49% per year with 3.38% per year in capital gains and 6.11% per year in dividends. Over this period, Nortel was spin-off in 2000 and Bell Aliant was spin-off in 2006. This is not a bad return over a 27 year period. This return includes Nortel and Bell Aliant spin-offs. There was a big problem with Nortel's spin-off as Nortel soared in 2000 bull market, but then totally crashed later. Nortel was crashing at the time of the spin off and it all happened very quickly.

If you look at the 5 and 10 year total return on this stock it is at 14.33% and 11.58% per year. The portion of this return attributable to dividend is 5.53% and 4.71% per year. The portion of this return attributable to capital gain is 8.80% and 6.87% per year.

Outstanding shares have increased by 1.3% and decreased by 1% per year over the past 5 and 10 years. Revenue growth is low to moderate. EPS growth is moderate. Cash Flow growth is low to moderate. Growth is better over the past 5 years than for the past 10 years.

Revenue has grown at 3.5% and 1% per year over the past 5 and 10 years. Revenue per Share has grown at 2.2% and 1.9% per year over the past 5 and 10 years.

EPS growth is at 7.1% and 6.1% per year over the past 5 and 10 years. Cash Flow has grown at 6.5% and 1.8% per year over the past 5 and 10 years. CFPS has grown at 5.2% and 2.8% per year over the past 5 and 10 years.

The Return on Equity was below 10% only twice in the past 10 years and that was in 2008 and 2009 when ROE was 5.1% and 9%, respectively. The ROE for 2014 was 15.5% and the 5 year median is 15%.

However, the ROE on comprehensive income is not as good and the 2014 ROE was 12.2% and the 5 year median value was 11.8%. The ROE on comprehensive income was below 10% at 9.9% in 2011 and 2012. The low ROE on comprehensive income suggests that the earnings may not be of good quality.

The debt ratios are mediocre. The Liquidity Ratio is just 0.50 in 2014. If you add in cash flow after dividends, then the ratio is 1.09. If you exclude the current portion of the long term debt the ratio is 0.85. If you then again added in cash flow after dividends, the ratio is 1.85. It is clear that the company relies on cash flow to cover current liabilities.

The Debt Ratio is 1.49 in 2014. I would prefer it to be at least 1.50, so it is just under the wire. However, the 5 year median ratio is better at 1.56. Leverage and Debt/Equity Ratios are 3.04 and 2.04 for 2014. These ratios are also a little higher than other telecoms I follow. They were better last year at 2.79 and 1.79.

This is the first of two parts. The second part will be posted on Monday, April 13, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, April 9, 2015

AltaGas Ltd. 2

Sound bite for Twitter and StockTwits is: price high, but not excessive. If the stock price is expensive, it does not seem to be excessively so. It would be better if the company could better grow its revenue and it has done this for the past couple of years and this is expected to continue in 2015. 2014 was not a good year for earnings but analysts also see improvements in this area in 2015. See my spreadsheet at ala.htm.

I own this stock of AltaGas Ltd (TSX-ALA, OTC-ATGFF). When I bought this stock in 2009 it was on many dividend growth stock lists. In 2009, I saw that this stock also had good growth in Revenues, Earnings, Dividends, and Stock Prices over the last 5 and 10 years. The stock had a fairly strong balance sheet. I took a small position in this stock, and planned to wait and see how things go with this stock before buying more. I bought more in 2010 and 2012.

This utility also has a lot of stock options outstanding. In 2014, the outstanding shares were increased by around 989,000shares for stock options. This amounts is around 0.74% of the outstanding shares. They have a book value of $24.9M and at the end of 2014 would be worth around $42.9M. This is not an anomaly because from 2011 to 2013 the outstanding shares were increased by 0.45%, 0.74% and 0.66% for stock options.

In the past year for insider trading there was $5.3M of insider selling with net insider selling at $4.8M and insider buying at $0.5M. Net insider selling is low as it is some 0.08% of this stock's market cap.

The 5 year low, median and high median Price/Earnings per Share Ratios were 22.15, 27.64 and 32.29. These are quite a bit higher than the corresponding 10 year P/E Ratios of 18.70, 16.15 and 18.70. I think that the 5 year P/E Ratios are rather high for a utility stock.

The current P/E Ratio is 26.04 based on a stock price of $42.45 and 2015 EPS estimate of $1.63. This P/E Ratio is not high against the P/E Ratios of the past 5 years, but it is high against the P/E Ratios of the past 10 years. I would think that it is rather high P/E Ratio for a utility stock.

I get a Graham Price of $27.45. The 10 year Price/Graham Price Ratios are 1.19, 1.38 and 1.57. I think that these ratios are a little high. The current P/GP is 1.51 based on a stock price of $42.45. This stock price test suggests that the stock price is relatively expensive. The reason for the lower Graham Price has to do with the fact that EPS are not growing but the stock price is. The thing is that a stock is considered cheap if the P/GP Ratio is below 1.00.

I get a 10 year Price/Book Value per Share Ratio of 2.07. The current P/B Ratio is 2.07 based on a stock price of $42.45 and BVPS of $20.55. The Book Value and BVPS has been growing nicely for this stock. This stock price test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 4.47%, a value some 6.8% higher than the current dividend yield of 4.17%. This stock price test suggests that the stock price is relatively reasonable. However, the historical average and historical median dividend yields are 6.27% and 4.67% and these yields are 34% and 25% higher than the current dividend yield of 4.17%.

Note that the historical high dividend yield is 10.11%. It is that high because this stock used to be an income trust company. It was thought that old income trust companies would end up with dividend yields of 4 to 5%. This stock is within that range. So maybe all this is pointing to a relatively reasonable stock price.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Buy and a Buy would be the consensus recommendation. The 12 month stock price consensus is $49.40. This implies a total return of 20.54% with 4.17% from dividends and 16.37% from capital gains. This is a very good return for a utility stock.

This recent Legacy article talks about recent re-ratings of this stock by analysts. This article by Alaska Highway News talks about LNG projects in B. C. This company provides Investor Presentations on their website.

This is the second of two parts. The first part was posted on Wednesday, April 08, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, April 8, 2015

AltaGas Ltd.

On my other blog I am today writing about possible cheap dividend stocks for April 2015 continue...

Sound bite for Twitter and StockTwits is: Dividend growth utility stock. The dividend yield is good on this stock at just over 4%. 2014 was not a good year, but analysts think that there is will be a nice improvement in 2015. For any stock held over a long period, there will be ups and downs. I still think that the company has long term potential. See my spreadsheet at ala.htm.

I own this stock of AltaGas Ltd (TSX-ALA, OTC-ATGFF). When I bought this stock in 2009 it was on many dividend growth stock lists. In 2009, I saw that this stock also had good growth in Revenues, Earnings, Dividends, and Stock Prices over the last 5 and 10 years. The stock had a fairly strong balance sheet. I took a small position in this stock, and planned to wait and see how things go with this stock before buying more. I bought more in 2010 and 2012.

This company changed from an Income Trust to a Corporation in 2010 and reduced its dividend by 39%. Since then they have again been increasing their dividend but the current dividend is still some 18% lower than what it was in 2010. The last dividend increase was in 2014 and it was for 15.7%. This is a higher increase that occurred in 2012 and 2013. If you look at dividend growth it is up by 3.4% per year over the past 10 years, but is down by 5% per year over the past 5 year.

This is a dividend growth company with good dividends and generally moderate growth. The current dividend yield is 4.2% and the 5 year median dividend yield is 4.5%. Although the dividend growth in 2014 was good, the dividend increase in 2012 was 4.3% and 6.3% in 2013.

The Dividend Payout Ratios for 2014 was 225% for EPS and 47.7% for CFPS. The 5 year median ratios are 137% for EPS and 54% for CFPS. The EPS for 2014 was low and EPS is expected to be much higher in 2015. Analysts are looking at a DPR of 109% for EPS in 2015 if dividend does not change or 119% if it is increased again around 7.9%.

Also a number of people are still looking at Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for this company. The DPR for FFO for 2014 is 45% and for AFFO is 42%. The company also gave out a normalized EPS value of $1.30 and the DPR for this EPS is 128%.

I have done well with this stock with a total return of 25.58% per year. The portion of this return attributable to dividends is 6.6% and to capital gain is 18.98%. I have had this stock for 5.8 years and my ACB is $22.16 and the dividend per share I have received is at $6.50.

The 5 and 10 years total return is a little less than I have received. The 5 and 10 year total return is 19.77% and 9.75% per year with 14.36% and 4.27% per year from capital gains and 5.41% and 5.48% per year from dividends.

Outstanding shares were increased by 10.8% and 9.7% per year over the past 5 and 10 years. This means that I as a shareholder am more interested in per share values. For revenue the growth is good, but for revenue per share, the growth is low. Cash Flow growth is also good, but CFPS growth is moderate. For earnings 2014 was a bad year and so there is moderate to low growth.

Revenue is up by 13.7% and 10.9% per year over the past 5 and 10 years. Revenue per Share is only up by 2.6% and 1.1% per year over the past 5 and 10 years. Cash Flow is up by 18.4% and 15.8% per year over the past 5 and 10 years. CFPS is up by 6.8% and 5.6% per year over the past 5 and 10 years.

For earnings, they down by 7.5% over the past 5 years and up by 3.8% per year over the past 10 years. Even looking at 5 year running averages, earnings and down by 2% per year over the past 5 years. 2014 was not a good year and EPS is down by 16% and 5.6% per year over the past 5 and 10 years. It also does not get much better looking at 5 year running averages as EPS is by this calculation down by 11% per year over the past 5.

The company has been putting out a normalized EPS value since 2005. This is meant to get rid of special items. This EPS value is quoted by some analysts. Still, this does not improve much as using these values NEPS is down by 5.1% and 5% per year over the past 5 and 9 years.

Growth in FFO and AFFO is the only earnings that give positive values. FFO per Share is up by 7.6% and 5.4% per year over the past 5 and 10 years. AFFO per share is up by 10.4% over the past 3 years. I can only find AFFO for this company from 2011.

The Return on Equity for 2014 is low at 2.7%. The 5 year median is just 6.1%. The ROE has not been above 10% for the last 5 years. The last year that it was above 10% is 2008. The comprehensive income for 2014 is better at 9.2%. This has a 5 year median of 7.6%. Comprehensive income has grown at 14.2% and 9.1% per year over the past 5 and 7 years. This has only been reported from 2007.

The debt ratios are good. The Liquidity Ratio for 2014 is 1.38. If you add in cash flow after dividends it rises to 1.69. The Debt Ratio for 2014 is 1.74. The Leverage and Debt/Equity Ratios for 2014 are 2.35 and 1.35. These are rather typical for a utility stock.

This is the first of two parts. The second part will be posted on Thursday, April 9, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

AltaGas operates physical assets and provides essential services to customers who produce and consume natural gas and power. Their gas business provides gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids. Their power business generates and delivers power in Alberta and British Columbia and is developing a significant portfolio of renewable power projects. Its web site is here AltaGas.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, April 7, 2015

TransCanada Corp. 2

On my other blog I am today writing about possible cheap dividend stocks for April 2015 continue...

Sound bite for Twitter and StockTwits is: Not Cheap. A lot of utilities have been expensive for a while. People have considered utility stocks as a good place to put money while interest rates are very low. See my spreadsheet at trp.htm.

I own this stock of TransCanada Corp. (TSX-TRP, NYSE-TRP). I bought the stock in 2000 at an opportune time. The company had been cutting their dividend payments in order to re-organize and get the company into shape for long term profitability. This company's stock price fell hard because of this. People who depend on dividends for their income can be an unforgiving lot and get really upset at company when a trusted company cuts dividends.

The first thing I noticed was that there are an awful lot of stock options granted to insiders. However, the actual number of stock options that increase outstanding shares is fine. In 2014 outstanding shares were increased by 1.221 shares or 0.17%. These shares have a book value of $53M and this number of shares was worth $69.7M at the end of 2014. Outstanding shares were increase by 0.32%, 0.23% and 0.28% between 2011 and 2013.

When I look at insider trading, I find $1.8M of insider buying and $22.6M of insider selling with net insider selling at $20.8M or 0.05% of the market cap.

The 5 year low, median and high median Price/Earnings per Share Ratios are 19.21, 20.65 and 22.09. The 10 year corresponding values are a bit lower at 16.07, 17.67 and 19.54. The current P/E Ratio is 22.66 based on a stock price of $54.15 and 2015 EPS estimate of $2.39. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $35.72. The 10 year low, median and high median Price/Graham Price Ratios are 1.11, 1.23 and 1.34. The current P/GP Ratio is 1.52 based on a stock price of $54.15. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 2.00. The current P/B Ratio is 2.28 based on a stock price of $54.15 and BVPS of 23.73. The current P/B Ratio is some 14.3% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable, but a bit on the high side. For this test to show price is expensive, the current P/B Ratio would have to be 20% higher than the 10 year median ratio.

The 5 year median dividend yield is 3.94% and the current dividend yield at 3.84% is some 2.6% higher. I get historical average and median dividend yields of 4.63% and 4.31%. The current dividend yield is some 17% and 11% higher. Also the current dividend yield is within 11% of the historical low dividend yield of 3.48%. This stock price testing suggests that the stock price is relatively reasonable, but a bit on the high side.

The analysts' recommendations are Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold. The most recommendations are a Buy and a Hold, but there is one more Hold recommendation than the Buy recommendation. The 12 month consensus stock price is $61.04. This implies a total return of 17.23% with 13.39% from capital gains and 3.84% from dividends.

This article in the Montreal Gazette is talking about this company scraping plans for a Quebec oil port. This article in the Financial Post talks about TransCanada being investigated for natural gas safety regulations. This article in the Financial Post talks about TransCanada getting into the rail business as Keystone XL delay drags on. In this article by Jacob Donnelly in the Motley Fool, Jacob gives 3 reasons to buy this company.

This is the second of two parts. The first part was posted on Thursday, April 2, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

TransCanada is a leader in energy infrastructure. Their network of pipeline taps into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services. It is a growing independent power producer. Its web site is here TransCanada.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, April 2, 2015

TransCanada Corp.

It is the Easter long weekend. I will not be blogging on Good Friday or Easter Monday. I am taking Easter Monday off as it was always a problem day for me when I worked. Schools were closed and also the Day Cares associated with schools were closed but I still had to go to work. It was always a problem to find someone to babysit my son. Now I can take Easter Monday off and I intend to.

Sound bite for Twitter and StockTwits is: Dividend Growth Utility stock. What you should expect from a utility stock for total return is around 8% per year. This stock meets this standard. I have done better because I took a chance on it when it cut dividends and the stock price sank. See my spreadsheet at trp.htm.

I own this stock of TransCanada Corp. (TSX-TRP, NYSE-TRP). I bought the stock in 2000 at an opportune time. The company had been cutting their dividend payments in order to re-organize and get the company into shape for long term profitability. This company's stock price fell hard because of this. People who depend on dividends for their income can be an unforgiving lot and get really upset at company when a trusted company cuts dividends.

It is interesting to review this stock back to back with TransAlta at this point. TransAlta has just cut their dividends to reorganize the company. I had bought TransCanada in 2000 when they were cutting their dividend to reorganize the company. I only paid $12.01 per share for this company in 2000.

Since then I have made several other purchases. I have paid an average of $30.71 per share on a company that is currently selling at $54.15. I have done well and have a total return of 12.20% with 7.37% from capital gains and 4.83% from dividends.

Total return on this stock over the past 5 and 10 years is at 11.53% and 7.67% per year. The dividend portion of this return is 4.18% and 3.69% per year over the past 5 and 10 years. The capital gains portion of this return is 7.35% and 3.98% per year over the past 5 and 10 years. I have done better probably because my first purchase was in 2000 at a low price. I have held this stock for 15 years now.

This is a dividend growth company. The dividends increases are moderate as is the dividend yield. The current dividend yield is 3.84% and the 5 year median dividend yield is 3.94%. The dividends have grown at 4.8% and 5.1% per year over the past 5 and 10 years. The last dividend increase was in 2015 and the increase was for 8.3%. This is a higher dividend increase than they have had for the past 10 years.

Outstanding shares have increase by 0.70% and 3.87% per year over the past 5 and 10 years. So, when looking at growth we need to pay attention to the per share values. Revenue and Earnings growth is low to moderate. Cash Flow growth is moderate to good.

Revenue is up by 2.6% and 7.2% per year over the past 5 and 10 years. Revenue per Share is up by 1.9% and 3.2% per year over the past 10 years. EPS is up by 3.1% and 1.5% per year over the past 5 and 10 years. Cash Flow is up by 6.7% and 9.9% per year over the past 5 and 10 years. Cash Flow per Share is up by 4.2% and 5.76% per year over the past 5 and 10 years.

Return on Equity has not been above 10% over the past 5 years. From 2000 to 2008 ROE was above 10%. The ROE for 2014 is 8.4% with a 5 year median value of 8.1%. The ROE on comprehensive income for 2014 was lower at 7.6% and its 5 year median is at 7.7%. This suggests that the earnings may not all be of good quality.

For 2014 the Liquidity Ratio is very low but it has always been quite low. This ratio is 0.47 for 2014. If you add in cash flow after dividends it only reaches 0.83. However, if you add back in the current portion of the long term debt the value is 0.61 and adding in cash flow after dividends we get to 1.08. Still a low figure, but this is a utility stock. Note that when this ratio is below 1, it means that current assets cannot cover current liabilities.

The Debt Ratio is at1.54, an acceptable value. The Leverage and Debt/Equity Ratios for 2014 are 2.85 and 1.85. These are rather normal for utility stocks.

This is the first of two parts. The second part will be posted on Tuesday, April 7, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

TransCanada is a leader in energy infrastructure. Their network of pipeline taps into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services. It is a growing independent power producer. Its web site is here TransCanada.

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. 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.