Thursday, April 17, 2014

Davis & Henderson Corp. 2

I own this stock of Davis & Henderson Corp. (TSX-DH, OTC-DHIFF). This stock has been recommended a number of times by MPL Communications. So I looked into it and bought some. At that time this company was an income trust. Dividend yield was good and they had a history of dividend increases.

When I look at insider selling I find $0.5M of insider selling and $0.5M of net insider selling. All the selling is by the CFO and as a result of this sale, the CFO has no more shares in the company. The CFO has not changed so this sale tells of nothing as people sell shares for all sorts of reasons.

There is some insider ownership with the Chairman owing shares worth around $6.4M, the another director having shares worth around $8.9M and the CEO having shares worth around $1.4M

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.31, 11.77 and 14.14. The current P/E Ratio is 14.12. The current P/E is based on a stock price of $31.20 and 2014 EPS estimates of $2.21. This stock price tests suggests that the stock price is still reasonable, but it is at the top end of the reasonable range.

I get a Graham Price of $25.58. The 10 year Price/Graham Price Ratios are 0.79, 0.95 and 1.12. The current P/GP Ratio is 1.17. This stock price test suggests that the current stock price is high.

The 10 year median Price/Book Value per Share is 1.75. The current P/B Ratio is 2.18 based on a BVPS of $14.21 and a current stock price of $31.20. The current P/B Ratio is some 24% higher than the 10 year median P/B Ratio. This stock price test suggests that the current stock price is high.

Because dividends were cut in the change from an income trust to a corporation, any stock price test based on dividend yield is not valid. I can say that it was expected that old income trusts were expected to end up with a dividend yield between 4 and 5% by a combination of stock price increases and dividend decreases and this is where this stock has end up. The current Dividend Yield is 4.1%.

Looking at the Price/Cash Flow per Share Ratios, the 10 year median P/CF Ratio is 7.10 and the current P/CF Ratio is 17.63 based on a stock price of $31.20 and 2014 CFPS estimate of $2.36. This stock price test suggests that the stock price is high. (Analysts do not expect much growth in CFPS for 2014 as the 2014 CFPS estimates is almost 25% lower than the CFPS for 2013.)

If you look at the Price/Sales Ratio, the 10 year medina P/S Ratio is 2.30 and the current P/S Ratio is 2.26 a value almost 2% lower. The current P/S Ratio is based on a stock price of $31.20 and Revenue per Share at $13.80 or Revenue at $1,114.00. This stock price test suggests that the stock price is reasonable. (Analysts seem to be expecting a big increase (around 33%) in Revenues for 2014.)

The analysts' recommendations are Buy and Hold, and the consensus recommendation would be a Hold. The 12 month target stock price is $31.80. This implies a total return of 6.03% with 1.92% from capital gains and 4.1% from dividends. The 12 total returns are consistent with the recommendations and with my stock price testing.

There is an article in the Financial Postabout the Harland Financial Services purchases being a transformational deal for D&H. The blogger Passive Income Earner did a review of this stock last year. This company was a January 2014 buy for the fund Dynamic Aurion Canadian Equity Fund.

Most of my stock price testing suggests that the stock price is rather high. See my spreadsheet at dh.htm.

This is the second of two parts. The first part was posted on Wednesday, April 16, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson.

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 16, 2014

Davis & Henderson Corp.

On my other blog I am today writing about OAS and Immigrants continue...

I own this stock of Davis & Henderson Corp. (TSX-DH, OTC-DHIFF). This stock has been recommended a number of times by MPL Communications. So I looked into it and bought some. At that time this company was an income trust. Dividend yield was good and they had a history of dividend increases.

This is another dividend growth company. This one has rather high dividends and rather lower increases. The 5 and 10 year dividend growth tells us nothing as this used to be an income trust and when it converted to a corporation, it cut its dividends by almost 35%.

As an income trust it had rather high dividend yield with a median dividend yield of around 9% and a median increase of around 3.3%. Currently the dividend is around 4% and the latest dividend increase, for 2013 was for 3.2%. Although the 5 year median dividend yield is still up around 8.4% I doubt it will go there again. I would expect that the dividends would be in the 4 to 5% range.

They have not yet got the Dividend Payout Ratios under control with the 5 year median DPR for earnings at 119% and the DPR for Cash Flow at 68%. Last year 2013 was not a great year for this company and the DPR for earnings was at 197% and for Cash Flow was at 68%. The DPR for earnings is expected by analysts to be much better in 2014 at below 60%.

I have done very well with this stock as I bought it while it was still an income trust company. My total return is 26.77% per year with 18.85% per year from capital gains and 7.92% per year from dividends (or distributions.)

The 5 and 10 year total return to date is at 19.77% and 9.30% per year. The dividend portion of this return is at 6.75% and 6.07% per year over the past 5 and 10 years. The capital gains portion of this return is at 13.02% and 3.23% per year over the past 5 and 10 years. The thing is that there has not been much increase in the stock price until fairly recently. The stock peaked in 2005 at $23.84 and then wandered around until 2012.

The outstanding shares have increased by 12.9% and 7.9% per year over the past 5 and 10 years. Because of the increasing number of shares, the "per share" become quite important. Revenues have been increasing nicely. Last year was not a good year for earnings or cash flow so they are down. However, for both earnings and cash flow, the 5 year running averages are better than the 5 and 10 year growth figures.

Revenue is up by 17.9% and 12.8% per year over the past 5 and 10 years. Revenue per share is up by 4.4% and 4.6% per year over the past 5 and 10 years.

Earnings are down by 18.4% and 6.6% per year over the past 5 and 10 years. However, if you look at the 5 year running averages for the last 5 and 7 years, the decreases is at 3.6% and 0% per year.

Cash Flow is up by 5.9% and 8.3% per year over the past 5 and 10 years. Cash Flow per Share is down by 6.3% per year over the past 5 years and up by 0% per year over the past 10 years. If you look at 5 year running averages, cash flow per share is up by 2.1% and 3.8% per year over the past 5 and 7 years.

Until 2012, the Return on Equity was above 10%. For 2013 the ROE is low at 3.8% and it has a 5 year median value of 12.7%. The ROE on comprehensive income was somewhat better than that on net income coming in at 6.2%. The 5 year median is also a bit high at 14%.

The Liquidity Ratio for 2013 is just 0.71. It means that the current assets cannot cover the current liabilities. The company relies on cash flow to cover current liabilities. If you include cash flows after dividends, the Liquidity Ratio becomes 1.07. Not great but adequate. The Liquidity Ratios are usually better than the current ones as the 5 year median Liquidity Ratio is 0.88 and the Liquidity Ratio with cash flow after dividends is 1.13.

The Debt Ratio is much better with a value of 2013 of 1.65. The 5 year median Debt Ratio is 2.24. Leverage and Debt/Equity Ratios are currently a little high at 2.54 and 1.54. The 5 year median values are much better at 1.56 and 0.56.

This is a company probably best known for providing cheque stock to banks. They are moving towards providing more technological services to banks and other financial institutions. Technology is always disruptive. They are also expanding into the US market.

I am pleased with my investment in this company and I continue to hold this stock. I think that total returns are going to lower in the future, but I see this company as a solid addition to my portfolio. See my spreadsheet at dh.htm.

This is the first of two parts. The second part will be posted on Thursday, April 17, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson.

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 15, 2014

Toromont Industries Ltd. 2

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.

The insider trading report shows that there was insider selling of $2.4M and net insider selling of $2.4M. There was a very small amount of insider buying. This is less than 1% (0.08%) of the market cap of this stock. Insiders not only option but other option like vehicles called Rights Deferred Share Units. (See my site for information on Insider Trading.)

Outstanding shares were increase by 443,000 shares in 2013 with a book value of $8.3M and this numbers of shares was worth $11.8 at the end of 2013. Also, this number of shares was less than 1% (0.58%) of the outstanding shares at the end 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.31, 14.15 and 16.15. The current P/E Ratio is 15.39 based on a stock price of $25.85 and 2014 earnings estimate of $0.58. This stock price tests suggests that the stock price is reasonable, although it is at the higher end of the reasonable range. (See my site for information on Price/Earnings Ratio.)

I get a Graham Price of $16.84. The 10 year low, median and high median Price/Graham Price Ratios are 12.0, 1.40 and 1.60. The current P/GP Ratio is 1.53. This stock price test suggests that the stock price is reasonable, although it is at the higher end of the reasonable range. (See my blog for information on the Graham Price.)

I get a 10 year Price/Book Value per Share Ratio of 2.74 and the current P/B Ratio is 3.45. The current ratio is based on a Book Value per Share of $7.50 and a stock price of $25.85. The current P/B Ratio is some 26% higher than the 10 year P/B Ratio and this stock price test suggests that the stock price is high. (However, the 5 year median P/B Ratio is higher than the 10 year P/B Ratio at 3.23 and the current P/B Ratio is only 6% higher than the 5 year median ratio.) (See my blog for information Book Values.)

The 5 year median dividend yield is 2.23% and the current dividend yield is 4% higher at 2.32%. This stock price test suggests that the stock price is reasonable. If you look at historical dividend yields, the average is 2.3% which is only 1% lower than the current dividend yield and the median is 1.84% which is 26% lower than the current dividend yield. On an historical basis, the stock price would appear to be reasonable to cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The Hold recommendation is the most common and it is the consensus recommendation. The 12 month target stock price is $27.30. This implies a 12 month total return of 7.93% with 2.32% from dividends and 5.61% from capital gains. (See my blog for information on analyst ratings .)

The blogger Dividend Blogger has this stock and recently talked about the dividend increase.

This is a dividend growth stock and most of my stock tests suggest that the stock price is reasonable. This is especially so of the historical dividend yield test. I note that most analysts have no enthusiasm for this stock. See my spreadsheet at tih.htm.

This is the second of two parts. The first part was posted on Monday, April 14, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Its web site is here Toromont Industries.

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 14, 2014

Toromont Industries Ltd.

On my other blog I am today writing about what is in my portfolio continue...

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.

This stock is a dividend growth stock with a moderate dividend and generally good dividend growth. The dividend was cut in 2011 to account for the dividend that went with the Enerflex spin off. So this was not really a dividend cut.

The 10 year dividend growth, which includes the cut in 2008, is at 9.3% per year. This does really reflect the increases under this stock. In 2013, dividends were raised by 8.3% and for 2014 dividends are already up by 15.4%. The median dividend increase over the past 10 years is at 12.6%. So it comes down to decent dividend and decent growth.

The Dividend Payout Ratio are good on this stock with the 5 year median DPR for EPS at 32% and for CFPS at 22%. The DPR for 2013 is the same at 32% for EPS and 22% for CFPS.

The only way to value this stock's performance is to include the Enerflex (TSX-EFX) spin off. The problem was that this spin off was valued at $12.95 but it was not long before the price fell. I sold these shares at around $10.25 and felt lucky to have done so. I have made a total return of 7.34% per year with 5.46% from capital gains and 1.88% from dividends.

If you substitute what I actually got for my Enerflex stock in calculating total return over the past 5 and 10 years, the total return is at 8.74% and 8.33% per year. This would include a capital loss of 1.44% over the past 5 years and a capital gain of 2.24% per year over the past 10 years. The dividends portion of this return is at 10.18% per and 6.09% per year over the past 5 and 10 years. None of this is a great showing, but it is acceptable.

The higher dividends in these calculations are because the spin-off of Enerflex is considered to be a dividend. The dividends would be closer to what I got on my stock at 1.88%, although total return would be the same as shown above.

Outstanding shares have increased by 3.5% and 1.9% per year over the past 5 and 10 years. I did not exclude Enerflex from revenue, cash flow or earnings. The problem is that Enerflex was just purchased in 2010 and then sold in 2011. It did affect these values in these two years, but not the values before or after.

The 10 year values for Revenue, Earnings and Cash Flow growth is better than that for the last 5 years. Also, exactly 5 and 10 years ago were good years for this company, so the 5 year running averages over the past 5 and 10 years are better than the values for the past 5 and 10 years. Also there has been growth over the past couple of years.

Revenue per Share is down by 8.8% per year over the past 5 years. Revenues per Share are flat for the past 10 years. If you look at 5 year running averages, the Revenue per Share is down just 3.3% per year over the past 5 years and is up by 4% per year over the past 10 years. Revenue per share has grown over the past couple of years.

EPS is down by 5.9% per year over the past 5 years and up by 5.7% per year per the past 10 years. If you look at 5 year running averages, the EPS is down less than 1% per year over the past 5 years and is up by 8.7% per year over the past 10 years. EPS has grown over the past couple of years.

CFPS is down by 3% and up by 4.9% per year over the past 5 and 10 years. If you look at 5 year running averages, CFPS is down by less than 1% per year over the past 5 years is up by 7.5% per year over the past 10 years. CFPS is up by almost 10% between 2012 and 2013.

Over the past 10 years, Return on Equity was lower than 10% for only one year and that year was 2010. The ROE for 2013 was 21.3% and the 5 year median ROE is at 21.3%. The ROE on comprehensive income is similar with an ROE for 2013 at 22.8% and with a 5 year median at 22.8%.

The debt ratios for this stock are very good. The Liquidity Ratio is 2.18. The Debt Ratio is 2.27 and the Leverage and Debt/Equity Ratios are at 1.79 and 0.79. This company has a strong balance sheet.

I like the strong balance sheet for this industrial stock. I think that there will be good dividend increases in the future. To me it is still a dividend growth stock. However, their purchase and spin off of Enerflex seems to make little sense. This stock has good Dividend Payout Ratios. See my spreadsheet at tih.htm.

This is the first of two parts. The second part will be posted on Tuesday, April 15, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Its web site is here Toromont Industries.

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 11, 2014

Barclays PLC ADR 2

I own this stock of Barclays PLC ADR (UK-BARC, NYSE-BCS). I bought this stock when Barrett took over in 2000. Barrett used to run Bank of Montreal in Canada. At that time Barclays Bank was a good dividend paying stock and I thought it would give me some geographical diversifications.

I do not find it easy to get insider trading information for non-Canadian companies. A site I went to called Stockopedia only talked about insider trading for directors. In the past year insider selling for directors was at $30.8M US$ and net insider selling was at $30.7M US$. There was a small amount of insider buying at $0.1M US$.

Outstanding shares were increased by 257M for stock options in 2013. These shares have a book value of $1,309M US$. This number of shares were worth around $1,154.7M US$ at the end of 2013. Outstanding shares have increased by leaps and bounds over the past few years with 2010 outstanding shares increase by 12M and $54.6M US$, with 2011 outstanding shares increased by 17M shares and $63.7M and with 2012 outstanding shares increased by 44M and $157.7M US$. This involves a rather lot of money.

The 5 year low, median and high median Price/Earnings per Share Ratios are 5.73, 10.12 and 12.87. These ratios have been moving down recently as the 10 year low, median and high median P/E Ratios are 7.72, 9.79 and 11.63. The current P/E Ratios is 10.37 based on a US$ stock price of $16.32 with $1.57 US$ 2014 EPS estimates for 2014. This stock price test suggests that the stock price is reasonable.

I get a Graham Price of $32.58 US$. The 10 year low, median and high median P/GP Ratios are 0.59, 0.784 and 0.89, The current P/GP Ratio is 0.50 based on a stock price of $16.32 US$. This stock price test suggests that the stock is cheap.

I get a 10 year median Price/Book Value per Share Ratio of 0.75. The current P/B Ratio is 0.55. The current ratio is some 73% of the 10 year median ratio. This stock price test suggests that the stock price is cheap.

The 5 year median dividend yield is 2.26% and the current dividend yield is 2.62% a value some 16% higher. This stock price test suggests that the stock price is rather cheap. However, if you look at historical dividend yields, the average is 3.72% and the median is 3.44%. These are 30% and 24% higher than the current dividend yield. On an historical basis, the stock price is expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell. There is only one recommendation each in the last two categories. The consensus recommendation is a Buy. The 12 month stock price target on this stock is UK£2.95. This implies a total return of 18.88%, with 2.62% from dividends and 21.50% from capital gains. A UK£2.95 price would translate into a $19.58 US$ price.

The Motley Fool site has Alan Oscroft saying that Barclays PLC is his pick of the banks. He thinks that it is cheap and will raise dividends nicely this year and next. I hope he is right. The site WKRB talks about this bank getting both Sell and Buy ratings.

I do not like how much is going to staff incentive plans. At the moment I have no plans to sell this stock however, I am keeping my eye on it. I still hope it will do better. See my spreadsheet at bcs.htm.

This is the second of two parts. The first part was posted on Thursday, April 10, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays.

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.

Barclays PLC ADR

I own this stock of Barclays PLC ADR (UK-BARC, NYSE-BCS). I bought this stock when Barrett took over in 2000. Barrett used to run Bank of Montreal in Canada. At that time it was a good dividend paying stock and I thought it would give me some geographical diversifications.

Although this bank has been in trouble since 2008, you can see the value of investing in dividend paying stocks. I have gained 3% per year on this investment. Not great mind you. However, I have not lost and I expect the bank to recover. Most banks outside Canada were hit a lot harder than Canadian banks were.

Dividends are paid in UK pounds, so dividends I get for my ADR shares, valued in US$ can vary because of currency exchange. Dividends are not paid like we get for most Canadian companies, including banks. For this bank you get one big dividend at the beginning of the year and then 3 small interim dividends. (This bank prior to 2008 used to pay one big dividend at the first of the year and then one small one at the end of the year.)

Because of the 2008 crisis, the dividends were decreased by 97% for 2009. They were raised by 350% in 2010, but that just means they were some 87% below the 2008 dividends. There were good increases in 2011 and 2012 of 22% and 18%, but then increases stopped. Dividends are still 81% lower than what they were in 2008 and it does not seem that they will catch up to 2008 dividends anytime soon.

This company had an EPS loss in 2012. For the financial year of 2013, the dividends paid were 175% of ESP. In 2013 the CFPS was negative. None of this gives me confidence of a dividend hike anytime soon.

Analysts seem to be expecting that dividends would go in in 2013 and now in 2014. However, the dividends did not change in 2013 from that paid in 2012. So far in 2014, the first dividend, which is always the largest paid in the year is that same as for 2012 and 2013.

The 5 and 10 years total return is very low at 0.73 per year for last 5 years and a loss of 6.57% per year for the past 10 years. The capital loss for the last 5 and 10 years is at 1.5% and 9.78% per year. The dividend portion of the total return is 2.23% and 3.21% per year over the past 5 and 10 years.

Outstanding shares have increased by 7.9% and 6.4% per year over the past 5 and 10 years. Most of these increases occurred in 2008 and 2009 at the rate of 27% and 36%. The shares have increased due to stock options, Share Issues and Conversion of Notes. It is the last two that have caused the considerable increases in 2008 and 2009. Revenues are up over the past 5 and 10 years, but not so much Revenue per Share, although if you use the 5 year running figures for Revenue they are somewhat better. Net Income and EPS are both down and Cash Flow is negative for 2013.

Revenue is up by 4% and 8.7% per year over the past 5 and 10 years. Revenue per Share is down by 5.6% and up by 2.1% per year over the past 5 and 10 years. The Revenue per Share is better using the 5 year running averages with RPS down by 3.4% and up by 4.1% per year over the past 5 and 10 years.

EPS is down by 61.9% and 56.6% per year over the past 5 and 10 years. Using the EPS 5 year running averages, the values are not so bad with EPS down by 15.4% and by 3.4% per year over the past 5 and 10 years. Net Income is down by 36.6% and 15% per year over the past 5 and 10 years. If you look at the 5 year running averages net income is down by 4.2% and up by 4.6% per year over the past 5 and 10 years.

However, what is not good is that although net income was positive for 2013, comprehensive income was negative. This is not a good sign. When the net income and comprehensive income are so different it calls question the quality of the earnings.

The Return on Equity for 2013 is very low at just 0.8%. The 5 year median ROE is also very low at 2.9%. As I said earlier the comprehensive income is negative so we do not have an ROE on it.

The Debt Ratio at 1.05 is generally where this ratio is for Banks. However, I have noticed that Canadian Banks have increased their Debt Ratios to 1.06. The Leverage and Debt/Equity Ratios for 2013 are 20.52 and 19.52. This is lower than they have been traditionally, but here again I see that the Canadian Banks are lowering these ratios into the 17.00 and 16.00 ranges. The better Canadian Ratios probably means that the Canadian banks are still more solid than this bank is.

This bank still seems to be struggling although analysts are still expecting better things from it this year. See my spreadsheet at bcs.htm.

This is the first of two parts. The second part will be posted on Friday, April 11, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

One of the largest financial services groups in the United Kingdom, Barclays is engaged in banking, investment banking and asset management worldwide. Its web site is here Barclays.

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 9, 2014

Sun Life Financial Inc. 2

On my other blog I am today writing about March 2014 Dividends continue...

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). After I sold my CIBC bond 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.

When I look at insider trading, I find insider selling of $40.5M and net insider selling at $40.2M. This is a lot. Insiders not only have stock options, but also have other option like vehicles called Deferred Share Units, Units Performance Share Units, Units Restricted Share Units, Units Sun Shares, Units Stock Fund Units and Units Incentive Share Units. So there are lots of ways that insiders are rewarded.

In 2013, outstanding shares were increase by 3M shares for stock options with a book value of $120M and this amount of shares were worth $112M at the end of 2013. This is reason enough to vote negative on questions of say on pay on the proxy. This is the highest increase in outstanding shares in the last few years as other years recently outstanding shares were increased by 1M to 2M shares.

The 5 year low, median and high median Price/Earnings per Share Ratios were 8.75, 10.40 and 11.90. This are a fair bit lower than the 10 year low, median and high median P/E Ratios which were 11.90, 13.28 and 14.57. The current P/E Ratio is 13.26 based on a stock price of $36.59 and 2014 EPS estimates of $2.76. This stock price test says that the stock price is high.

I get a Graham Price of $37.82. The 10 year low, median and high median Price/Graham Price Ratios are 0.76, 0.99 and 1.10. The current P/GP Ratio is 0.97 based on a stock price of $36.59. This stock price test says that the stock price is reasonable and below a median price.

I get a 10 year Price/Book Value per Share Ratio of 1.35. The current P/B Ratio is 1.59 based on a share price of $36.59 and a BVPS of $23.03. The current P/B Ratio is 18% higher than the 10 year P/B Ratio and this stock price test suggests that the stock price is reasonable, but towards to high end of the reasonable range.

The 5 year median dividend yield is 5.44% and the current dividend yield is 3.94% a value almost 28% lower. This stock price test suggests that the stock price is high. The historical average dividend yield is 4.49% a value some 12% higher than the current dividend yield. The historical median dividend yield is 2.5% a value some 57.4% lower than the current dividend yield. Here again there is mixed signals on reasonableness of the stock price. On an historical basis, the stock price would at least appear to be reasonable.

When I look at the analysts' recommendations, I find Buy and Hold recommendations. The most recommendations are in the Hold category and the consensus recommendation would be a Hold. The 12 month stock price consensus is $40.30. This implies a total return of 14.07% with 3.95% from dividends and 10.14% from capital gains.

You have to wonder about a Hold consensus and a total return expected of 14%. Rather a high expected return for a Hold recommendation. The problem is that there is a huge range of for the 12 month stock price consensus from $37.00 to $43.00, which comes to a 5% to a 22% total return.

A recent article in Forbes talks about this stock hitting oversold territory. By the way, this is a bullish sign. The blogger Dividend Growth Investing and Retirement explains why he has recently sold his shares in this company. He is right, of course, that this company is no longer a dividend growth company. However, I feel that it will be one again, I just do not know when. The blogger Passive Income Earner has a slightly different take on this stock.

The stock price is probably still at a reasonable level. This is certainly the case on a long term basis. However, this company has yet to really recover from 2008. The thing is we are in a time with extremely low historical interest rates. This is one big problem for insurance companies. I think that you got to consider insurance companies to be of high risk than they normally are considered to be. At this point, I will not be adding stock to any insurance company I currently hold, although on the other hand, I am not selling my shares either. See my spreadsheet at slf.htm.

This is the second of two parts. The first part was posted on Tuesday, April 8, 2014 and is 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.

Tuesday, April 8, 2014

Sun Life Financial Inc.

I own this stock of Sun Life Financial Inc. (TSX-SLF, NYSE-SLF). After I sold my CIBC bond 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.

Insurance companies are still having a hard time. This will continue until interest rates go to a more normal level and it is hard to say when that will be. For my investment in this company I have made a return of 6.13% with 3.83% from dividends and 2.3% from capital gains.

As with other insurance companies, this company has not raised their dividends since 2008. The dividend payout ratios are reasonable at 55.6% for EPS and 31.2% for CFPS.

The 5 and 10 year total return on this stock has not been much with the 5 and 10 year total returns at 7.22% and 2.31% per year. The portion of these returns from dividends is 3.34% and 3.24% per year over the past 5 and 10 years. The portion of these returns from capital gains is at 3.88% per year over the past 5 years and a loss of 0.92% per year over the past 10 years. Note that over the past two years, the stock price has increased by over 42% each year.

Of course the beauty of dividend paying stock is that you tend not to lose much over the longer timer because of the dividends.

The outstanding shares have increased marginally over the past 5 and 10 years at 1.7% and 0% per year. Revenues, earnings and cash flows are all down over the past 5 and 10 years. Analysts last year thought 2013 would be a better year for this stock. Now they think that 2014 will be a better year.

Revenue per Share is down by 3.9% and 4.7% per year over the past 5 and 10 years. Earnings are up by 2.5% per year over the past 5 years, but down by 3.22% per year over the past 10 years. Cash Flow per Share is down by 20% and 15% per year over the past 5 and 10 years.

The Return on Equity is also low, coming in at just 6.1% for 2013 and with a 5 year median ROE of 6.1%. A brighter story is that the comprehensive income was better than net income and has an ROE or 10.7% for 2013 with a 5 year median value of 8.2%.

The Liquidity Ratio at 1.97 for 2013 is good and this ratio has always been good. The Debt Ratio is low at 1.10, but this is better than a lot of finance companies. The Leverage and Debt/Equity Ratios at 11.50 and 10.50 are normal for this company and lower than some other financial companies.

I believe that this stock will recover and again become a dividend growth stock. I just do not know when this will occur. See my spreadsheet at slf.htm.

This is the first of two parts. The second part will be posted on Wednesday, April 9, 2014 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 7, 2014

Melcor Developments Inc. 2

On my other blog I am today writing about possible cheap dividend stocks to buy continue...

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.

When I look at insider trading, I find insider selling at $5.3M and no insider buying. There is insider ownership, the most notable is that of the Chairman who owns shares worth around $35.5M. There is some other insider ownership with the CEO having shares worth around $1.2M, an officer having shares worth around $2.0M and a director with shares worth around $2.7M.

For 2013 the outstanding shares were increased by 547,000 for stock options with a book value of $7.8M. This number of shares was worth $11M at the end of 2013. This number of shares is also 1.8% of the outstanding shares. I looked at the increase in outstanding shares for 2010 to 2012 and they were all under 1%.

When I look at the increase in the number of shares for stock options for 2013, I think that an increase of 1.8% is rather high. Most companies increase their outstanding shares for stock options at a lower percentage of the outstanding shares. Take TransCanada Corp which I recently reviewed where the share option book value was $80M, a much higher value than for this stock. However, the increase in actual shares for TransCanada Corp only was at 0.3% of the outstanding shares of the company.

The 5 year low, median and high median Price/Earnings per Share Ratios are 5.23, 6.07 and 6.79. The current P/E Ratio is 10.17 based on a stock price of $21.56 and a 2014 EPS estimate of $2.12. This stock test suggests that the stock is rather high. However, the P/E Ratios on this stock are very low.

I get a Graham Price of $21.56. The 10 year low, median and high median Price/Graham Price Ratios are 0.39, 0.61 and 0.78. The current P/GP Ratio is 0.57 based on a stock price of $21.56. This stock test suggests that the stock is in the reasonable price range.

The 10 year Price/Book Value per Share Ratio is 1.02. The current P/B Ratio is 0.86 a value just 84% of the 10 year ratio. This is based on a stock price of $21.56 and a BVPS of $25.03. This stock test suggests that the stock is in the reasonable price range. Also, when the P/B Ratio is below 1.00 a stock is generally considered to be cheap.

I get a 5 year median dividend yield of 2.92% and the current dividend yield is 2.32%, a value some 21% lower. This stock test suggests that the stock price is relatively rather high. However, if you look at historical average and median dividend yields of 2.83% and 2.77%, the current dividend yield is from 16% to 18% lower. This stock test suggests that the stock is in the reasonable price range, but it might be towards to top end of this range.

As far as I can see, there seems to be only one analyst following this stock and the analyst's recommendation is a Buy. The 12 month stock price is $29.50. This implies a total return of $39.15% with 2.32% from dividends and $36.83% from capital gains.

This company is based on Edmonton and the Edmonton Journal has a positive article on this company and its good showing in 2013. There is a second article in the Edmonton Journal talking about the chairman who says that Melcor is a public company with a family-company flavor.

This is a small real estate company from Western Canada. It is a rather risky stock to own although I have done just fine on it. You would buy it for diversification. See my spreadsheet at mrd.htm.

This is the second of two parts. The first part was posted on Friday, April 04, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor.

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 4, 2014

Melcor Developments Inc.

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009.

This is a real estate company that pays dividends twice a year. You really do not know what the dividends will be until they are declared. In most years the dividends go up, but sometimes they also go down. The company has also paid special dividends. Dividends have grown at the rate of 3.6% and 16.4% per year over the past 5 and 10 years.

The last dividend decrease was in 2008, when the dividends decreased some 40% between 2008 and 2009. The most recent increase was in 2013 and it was for 8.7%. The company also paid a special dividend in 2013 that was equal to the full year's dividend. The dividend yield on this stock is moderate with the current dividend at 2.3% and the 5 year median dividend yield at 2.9%.

The 5 year median Dividend Payout Ratios for EPS is 23.7% and for CFPS is 52.6%. The DPR for 2013 was at 33% for EPS and 62% for CFPS. This brings up another point in that the EPS has been higher than the CFPS over the past 3 years. Companies that have higher EPS than CFPS tend to not do as well as companies that have higher CFPS than EPS. (This is a tendency not an absolute.)

I have earned a 14.89% per year total return on this company with 11.84% from capital gains and 3.05% from dividends. The 5 and 10 years total returns on this stock is at 17.17% and 19.83% per year with 13.61% and 15.51% per year from capital gains and 3.56% and 4.33% per year from dividends.

Outstanding shares have basically not changed over the past 5 and 10 years. The outstanding shares have increased due to stock options and decreased due to buy backs. Revenue, Earnings and Cash Flow have all increased nicely over the past 5 and 10 years.

Revenue per Share is up by 22 % and 14.3% per year over the past 5 and 10 years. If you look at the 5 year running averages, they are good, but not quite so good at 8.3% and 11.6% per year over the past 5 and 10 years. This is because exactly 5 and 10 years ago, the company hits lows in revenues.

The EPS is up by 18.4% and 17.9% per year over the past 5 and 10 years. Here again the 5 year running averages show lower increases at 9.5% and 16.4% per year over the past 5 and 10 years.

The Cash Flow per Share is up by 27.1% and 8.7% per year over the past 5 and 10 years. The 5 year running averages over the past 5 years is lower at 7.94% per year increase.

The return on equity has been above 10% over the past 5 and 10 years. The ROE for 2013 is at 12.8% and the 5 year median is at 15.1%. The ROE on comprehensive income is similar with the ROE for 2013 at 13.6% and the 5 year median at 13.6%.

The Liquidity Ratio is very good at 3.18 and with a 5 year median at 3.18. The Debt Ratio is also very good at 1.80 and with a 5 year median at 1.86. Leverage and Debt/Equity Ratios are typical for a real estate company at 2.25 and 1.25.

Although this is a small company and not followed by many analysts, I have been pleased with my investment in this company. I do not currently hold that much of this stock. See my spreadsheet at mrd.htm.

This is the first of two parts. The second part will be posted on Monday, April 7, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor.

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.