Friday, January 23, 2015

National Bank of Canada 2

I do not own this stock of National Bank of Canada (TSX-NA, OTC-NTIOF). I thought I should follow one of the smaller Canadian Banks. This seems like a good choice.

Over the past year there has been insider trading, with insider selling at $10.4M and insider buying at $1.3M. The net insider selling is at $9.1M and since this is only 0.05% of the stock's market cap, it is a relatively small amount.

In 2014 some 2.945M shares were issued for stock options purposes. This represents 0.89% of the outstanding shares and is a little high. As you can see from the table below the relative amount of stock options shares issued for the National Bank is much higher than the other banks. Whether you are looking at percentage of outstanding shares or market cap, the percentage is the same. On a relatively basis, which is the one that really counts, National Bank is issuing more stock options than the other banks.

Bank Symbol Shares % of o/s Shares Value 2014
Bank of Montreal BMO 2.133 0.33% $173.187M
Bank of Nova Scotia BNS 3.493 0.29% $241.121M
Royal Bank RY 2.723 0.19% $217.867M
National Bank NA 2.945 0.89% $155.117M
TD Bank TD 5.000 0.27% $277.350M


There is some insider ownership with the CEO having shares worth around $13.8M and the chairman having shares worth around $1.3M. The above ownership does not add up to much of a percentage of outstanding shares. They are around 0.09% of outstanding shares or market cap.

The 5 year low, median and high median Price/Earnings Ratios are 9.26, 10.28 and 11.30. The corresponding 10 year median P/E Ratios are similar at 9.36, 10.49 and 12.18. The current P/E Ratio is 9.71 based on a stock price of $45.04 and 2015 EPS estimates of $4.64. This stock price test suggests that the stock price is relatively reasonable. The stock price is good because it is relatively below the median.

It is interesting to compare historical ratios. If you look at 5 year median P/E Ratios, National Bank has the lowest of all the other banks. This means that investors are willing to pay relatively more money for the other banks than for this bank.

Bank Symbol Low Median High
Bank of Montreal BMO 10.51 11.34 12.10
Bank of Nova Scotia BNS 10.64 11.88 13.11
Royal Bank RY 11.34 12.60 13.85
National Bank NA 9.26 10.28 11.30
TD Bank TD 11.40 12.63 13.84


I get a Graham Price of $51.86. The 10 year low, median and high median Price/Graham Price Ratios are 0.80, 0.89 and 1.05. The current P/GP Ratio is 0.87 based on a stock price of $45.04. This stock price test suggests that the stock price is relatively reasonable. The stock price is good because it is relatively below the median.

It is also interesting to look at the relative 10 year low, median and high P/GP Ratios for all the bank stocks. The chart below shows the 10 year low, median and high Price/Graham Price Ratios. This chart really shows the same results as the last chart. Investors are willing to pay more relative to the Graham Price for the other bank stocks than for National Bank.

Bank Symbol Low Median High
Bank of Montreal BMO 0.82 0.93 1.12
Bank of Nova Scotia BNS 0.97 1.09 1.24
Royal Bank RY 1.03 1.21 1.41
National Bank NA 0.80 0.89 1.05
TD Bank TD 0.88 1.00 1.11


I get a 10 year median Price/Book Value per Share Ratio of 1.79. The current P/B Ratio is 1.75 based on a stock price of $45.04 and Book Value per Share of $25.76. The current P/B Ratios is some 2% lower than the 10 years P/B Ratio. This stock price test suggests that the stock price is relatively reasonable. The stock price is good because it is relatively below the median.

For Book Value, the lower the P/B Ratio is, the more book value you get for your money. Theoretically, the book value is the difference between assets and liabilities and therefore is the potential value a company is worth or the breakup value of the stock for the shareholders. Here, on a relative basis shareholders are paying or are willing to pay more for than for TD and BNS stock than for National Bank stock based on the bank's book value.

Bank Symbol P/B Ratio
Bank of Montreal BMO 1.59
Bank of Nova Scotia BNS 2.16
Royal Bank RY 2.25
National Bank NA 1.79
TD Bank TD 1.72


When I look at the dividend yields, the current dividend yield is 4.44%. The 5 year median, Historical Average and the Historical Median Dividend yields are 4.06%, 4.77% and 3.84%. The current dividend yield is higher than both the 5 year median and the Historical Median dividend yields by 9.3% and 15.6%. The current yield is lower than the Historical Average by 6.8%.

The 5 year median and the Historical Median dividend yields are probably the best ones to use. The current dividend yield is higher than both of these yields. This stock price test suggests that the stock price is relatively reasonable. The stock price is good because it is relatively below the median.

If you compared dividend yields that I have on my spreadsheet for 5 year median, Historical Average and Historical Median, mostly National Bank is higher than all but the for BMO. The only other exception is for Royal Bank's Historical Median Dividend Yield which is higher than National Bank's Historical Median Dividend yield.

Bank Symbol 5 Year Hist. Ave Hist. Med
Bank of Montreal BMO 4.69% 5.30% 4.62%
Bank of Nova Scotia BNS 3.92% 4.18% 3.81%
Royal Bank RY 3.91% 4.23% 3.92%
National Bank NA 4.06% 4.77% 3.84%
TD Bank TD 3.52% 3.49% 3.40%


A problem with my spreadsheets is that I have a different number of years of data for different companies. If I use only the data on Dividend Yield going back to 1988, which is the first year I have data for the National Bank, then things change a bit. The National Bank's dividend yield is higher than all but for BMO's dividend yield.

Bank Symbol 5 Year Hist. Ave Hist. Med
Bank of Montreal BMO 4.69% 5.13% 4.46%
Bank of Nova Scotia BNS 3.92% 4.18% 3.81%
Royal Bank RY 3.91% 4.05% 3.65%
National Bank NA 4.06% 4.77% 3.84%
TD Bank TD 3.52% 3.40% 3.33%


When I look at analyst's recommendations, I find only Hold and Underperform recommendations. The consensus recommendations would be a Hold. Almost all recommendations are Hold recommendations. The 12 month stock price consensus is $53.60. This implies a total return of 23.45% with 4.44% from Dividends and 19.01% from capital gains.

FINRA, a US securities regulator fined National Bank $20,000 this year. The Ticket Reporter site talks about analysts giving National Bank Hold and Sell recommendations. A number of sites are talking about an insider selling National Bank stocks. A recent article from the Motley Fool suggests that this bank might be a good long term investment.

Sound bite for Twitter and StockTwits is: Stock Price is good. I really do not see the point in giving a recommendation of Hold or lower when a stock comes in at a good price. It is the right time to buy a stock when the price is good unless you think that the company is in trouble it is not likely to be able to handle. If you want this stock in your portfolio for the long term, perhaps now is the time to look at buying it. See my spreadsheet at na.htm.

This is the second of two parts. The first part was posted on Thursday, January 22, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

National Bank of Canada provides financial services to consumers, small and medium-sized enterprises, and large corporations & has branches in every province in Canada. It is also represented in the U.S. and Europe through its subsidiaries and alliances. Its web site is here Nation Bank.

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, January 22, 2015

National Bank of Canada

I do not own this stock of National Bank of Canada (TSX-NA, OTC-NTIOF). I thought I should follow one of the smaller Canadian Banks. This seems like a good choice.

This bank did quite well through the most recent bear market with keeping the dividend level for just over 2 years. This is a dividend growth stock. It has a good dividend and moderate to good dividend growth. The current dividend yield is 4.44% and the 5 year median dividend yield is 4.05%. The 5 and 10 year dividend growth is 8.2% and 10.8% per year.

The last dividend increase was in 2015 and the dividend increase was for 5.2%. This bank also has the habit of increasing their dividends more than once in a calendar year.

The Dividend Payout Ratios are good with the 5 year median DPR for EPS at 39% and for CFPS at 32%. The DPRs for 2014 was at 42% for EPS and 32% for CFPS. The DPRs are generally lower than the other banks, especially in regards to EPS.

Bank Symbols DPR for EPS DPR for CFPS
Bank of Montreal BMO 47% 37%
Bank of Nova Scotia BNS 45% 36%
Royal Bank RY 52% 25%
National Bank NA 39% 32%
TD Bank TD 44% 31%


As I had said a few days ago, I color code my growth value on my spreadsheet. Red is for low or negative growth. Blue is for moderate growth and green is for good growth. Looking at this spreadsheet there is a lot of green with some blue figures and the odd red figure. Revenues are important to drive both EPS and CFPS. However, the growth figures for Revenue are all blue.

The outstanding shares have not changed much over the past 5 and 10 years, so we can look at both Revenues and Revenues per Shares and there is not much difference. Revenue per share is up by 5.3% and 4.6% per year over the past 5 and 10 years.

EPS is up by 11.8% and 7.9% per year over the past 5 and 10 years and CFPS are up by 10.1% and 10.2% per year over the past 5 and 10 years.

This bank has had a Return on Equity of over 10% per year over the past 20 years. The 2014 ROE is at 16.8% and it has a 5 year median of 17.1%. Unfortunately, the ROE on comprehensive income is low, but still good at 14.9% and this has a 5 year median of 14.9%. When the comprehensive income ROE is below that for net income it suggests that perhaps the net income is not all of good quality.

This bank also has the lowest Debt Ratio of all the banks I have reviewed. The Debt Ratio is at 1.05 which is ok for a bank as basically anything at or over 1.4 is fine for a bank. However, the other banks I have reviewed have Debt Ratios of 1.06 or 1.07. On the other hand, this bank has a lot of cash on hand at some $24.56 per share which is some 46.6% of the stock price. Only BMO has a lot of cash on hand also.

Sound bite for Twitter and StockTwits is: Dividend Growth Bank stock. I had wanted to look at one of the smaller Canadian banks. This one is out of Quebec and it has expanded in Alberta. Sometimes it is worthwhile to invest in smaller companies as they might have more room to grow. See my spreadsheet at na.htm.

This is the first of two parts. The second part will be posted on Friday, January 23, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

National Bank of Canada provides financial services to consumers, small and medium-sized enterprises, and large corporations & has branches in every province in Canada. It is also represented in the U.S. and Europe through its subsidiaries and alliances. Its web site is here Nation Bank.

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, January 21, 2015

Enghouse Systems Ltd. 2

On my other blog I am today writing about a sample dividend growth stock portfolio continue...

I do not own this stock of Enghouse Systems Ltd. (TSX-ESL, OTC- EGHSF). This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividends.

When I look at insider trading over the past year, I see $1.4M of insider buying with $2.6M of insider selling with a net of insider selling at $1.3M. This amount of net insider selling amounts to just 0.13% of the stock's market cap and so is a relatively small amount.

There is some insider ownership with the CEO and Chairman having shares worth around $172.7M and a director having shares worth around $15.4M. Last year the number of outstanding shares was increased by 121,000 shares for stock options. The book value of these shares is $1.4M. This amount of shares has a value of $4.6M at the end of the October 2014 financial year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.70, 20.06 and 22.88. This is somewhat lower than the corresponding 10 year P/E Ratios of 17.65, 22.80 and 29.53. The current P/E Ratio is 28.01 based on a stock price of $38.93 and 2015 EPS estimate of $1.39. This stock price testing suggests that the stock price is relatively high.

I get a Graham Price of $15.78. The 10 year low, median and high median Price/Graham Price Ratios are 1.12, 1.34 and 1.65. The current P/GP Ratio is 2.47 based on a stock price of $38.93. This stock price testing suggests that the stock price is relatively high.

I get a 10 year median Price/Book Value per Share Ratio of 1.92. The current P/B Ratio is 4.89 based on a stock price of $38.93 and a current Book Value per Share of $7.96. The current P/B Ratio is 155% higher than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively high.

The current Dividend Yield is 1.03% based on a dividend of $0.40 and a stock price of $38.93. The 5 year median, the historical average and the historical median dividend yields are 1.74%, 1.85% and 1.74%. These dividend yields are 41%, 44% and 41% higher than the current dividend yield. This stock price testing suggests that the stock price is relatively high.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus would be a Buy. However, there are only 4 analysts following this stock. The 12 month stock price consensus is $45.20. This implies a total return of 17.135 with 1.03% from dividends and 16.11% from capital gains.

Joseph Solitro of the Motley Fool thinks this stock might be an interesting long term buy but he cautions that dividend yield is low. According to Legacy there was recent insider selling and TD lowered their recommendation on this stock from a Buy to a Hold. Michael Cloherty at Number Crunchers at the Globe and Mail was looking for good wealth creator stocks and this is one he came up with. The Dividend Guy blogger talks about Enghouse being on the Canadian Aristocrats list.

Sound bite for Twitter and StockTwits is: Tech stock's price is relatively high. I still like this stock, but I would not buy it at the present price as the price seems to be high. However, this stock has been relatively higher in the past. See my spreadsheet at esl.htm.

This is the second of two parts. The first part was posted on Tuesday, January 20, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse.

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, January 20, 2015

Enghouse Systems Ltd.

I do not own this stock of Enghouse Systems Ltd. (TSX-ESL, OTC- EGHSF). This stock has been recommended by Keystone Financial Publishing as a good Small Cap tech stock with dividend.

This company started to pay dividends in 2008. The dividends can be quite low, but the growth is very good. The current dividend yield is 1.03% and the 5 year median dividend yield is 1.74%. The dividend growth is at 26.8% and 23.8% per year over the past 5 and 6 years.

With low dividends, you generally get low Dividend Payout Ratios. This is true in this case. The 5 year median DPR for EPS is 31.5% and for CFPS is 16.6%. The DPRs for the year ending October 2014 is at 32.4% for EPS and 18.7% for CFPS.

I color code my growth value on my spreadsheet. Red is for low or negative growth. Blue is for moderate growth and green is for good growth. Looking at this spreadsheet, all I can see is green. For example the revenue per share has grown by 21.7% and 13.5% per year over the past 5 and 10 years. The EPS has grown by 32.7% and 10% per year over the past 5 and 10 years.

Shareholders have done well. The 5 and 10 year total return is at 37.39% and 17.97% per year. The portion of this return from dividends is at 1.82% and 0.84% per year over the past 5 and 10 years. The portion of this return from capital gain is at 35.57% and 17.13% per year over the past 5 and 10 years.

The debt ratios on this stock are good. However, the Liquidity Ratio has been dropping. It used to be very high, but for the 2014 financial year it is just a good normal number. For example, 5 years ago the Liquidity Ratio was 3.25 and for 2014 it is 1.50. Even last year it was 1.68.

The Debt Ratio for 2014 is very good at 2.74. This also has been dropping and 5 years ago it was 3.58. Leverage and Debt/Equity Ratios are good and they have always been good. The current ratios are 1.57 and 0.57 respectively.

Return on Equity over the past 5 years has been below 10% once and that was in 2010. The ROE was below 10% between 2005 and 2010 inclusive. So this company has been doing better since 2011.

Sound bite for Twitter and StockTwits is: Dividend growth tech stock. If you are going to buy tech stocks, I think that the first ones you should look at are those with dividends, like this company. See my spreadsheet at esl.htm.

This is the first of two parts. The second part will be posted on Wednesday, January 21, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Enghouse Systems Limited is a global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a large diverse enterprise software company through strategic acquisitions and managed growth. Its web site is here Enghouse.

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, January 19, 2015

Toronto Dominion Bank 2

On my other blog I am today writing about Bloggers Portfolios continue...

I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). This stock, as all banks, was on Mike Higgs' Canadian Dividend Growth Stock list and the other dividend lists that I followed. When I sold some Metro in 2009, I bought this stock. It is the 3rd bank stock I bought.

When I look at insider trading, I find $79.5M of inside selling and $78.6M of net insider selling with some insider buying at $1.7M. The net insider selling is at 0.08% of market cap and therefore is a relatively small amount.

The outstanding shares were increased last year by 5M shares with a book value of $199M. The value of this number of shares was $277.4M at the end of October 2014. This number of shares is 0.27% of the outstanding shares and is therefore a relatively small number.

There is some insider ownership with the CEO owing shares worth around $17.5M, the CFO owning shares worth around $5.7M and another officer owning shares worth around $19.2M. On the other hand these three people own around 0.04% of the outstanding shares and therefore a relatively small amount of the outstanding shares.

What I am looking for is a mission statement that the company wants to do well by their customers, employees, and community and thereby earn shareholders a reasonable return. As with most stocks I have reviewed so far, I cannot find a mission statement per se. However, I did find the following statements. Our Mission is we will be the Best Run, Customer-Focused, Integrated Financial Institution, with a Unique and Inclusive Employee Culture. Our Strategy is to produce long-term, profitable growth by building great franchises and delivering value to our Customers, Shareholders and Communities.

The 5 year low, median and high median Price/Earnings Ratios are 11.40, 12.63 and 13.84. The corresponding 10 year P/E Ratios are 11.41, 12.76 and 13.95 which are very close. The current P/E Ratio is 11.24 based on a stock price of $50.02 and 2015 EPS Estimates $4.45. This stock price test suggests that the stock is relatively cheap.

I get a Graham Price $53.46. The 10 year low, median and high median Price/Graham Price Ratios are 0.88, 1.00 and 1.11. The current P/GP Ratio is 0.94 based on a stock price of $50.02. This stock price test suggests that the stock price is relatively reasonable. However, on an absolute basis a P/GP Ratio below 1.00 suggests that the stock price is cheap.

The 10 year median Price/Book Value per Share is 1.72 and the current P/B Ratio is 1.75 based on a stock price of $50.02 and a BVPS of $28.54. The current P/B Ratio is just 2% higher than the 10 year median P/B Ratio. This stock price test suggests that the stock price is relatively reasonable.

The current dividend yield is 3.76%. The 5 year median, historical average and historical median dividend yields are 3.52%, 3.49% and 3.40% all values lower than the current dividend yield. The 5 year median, historical average and historical median dividend yields 6.8%, 7.85% and 10.54% lower than the current dividend yield. This stock price test suggests that the stock price is relatively reasonable. Although the stock price is relatively lower than the median and therefore shows it is at a good price.

When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $60.20. This implies a total return of 24.11% with 20.35% from capital gains and 3.76% from dividends.

A report by the Motley Fool is rather positive about this bank. Another Motley Fool report by Benjamin Sinclair says why Canadian Retirees should own this bank. There is a recent Seeking Alpha report by Juri Zguri on this bank. The web site of Legacy talks about recent recommendations for this bank.

Sound bite for Twitter and StockTwits is: Stock price cheap to reasonable. On most of the testing the current stock price is showing a better than past median relative prices. This probably shows that now is a good time to buy if you want to hold this stock. See my spreadsheet at td.htm.

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

The TD bank is a bank with a full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is here TD Bank.

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, January 16, 2015

Toronto Dominion Bank

I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). This stock, as all banks, was on Mike Higgs' Canadian Dividend Growth Stock list and the other dividend lists that I followed. When I sold some Metro in 2009, I bought this stock. It is the 3rd bank stock I bought.

This bank also just held the dividend payments steady for two years of 2009 and 2010. The 5 and 10 years dividend growth is at 5.6% and 10.5% per year. With the 5 year median dividend at 3.52% we have a stock with a good dividend with moderate increases. Also when this bank again started to increase the dividends, they started with quite good increases. The last dividend increase was in 2014 and it was for 10.6%. This bank is also currently increasing the dividends twice each year.

The Dividend Payout Ratio is good for this bank with a 5 year median DPR for EPS at 44.4%. The DPR for EPS for 2014 was also at 44.4%. One way of judging a company is how much of the original stock price has been paid by dividends. I have had this bank from almost 15 years and dividends cover some 45% of my original cost. Part of the reason is that I have had several stock purchases over the years. If you look at just the stock I bought almost 15 years ago, dividends cover some 125% of my original cost.

I have held this stock for almost 15 years and I have a total return of 14.76% per year with 11.37% from capital gains and 3.39% from dividends. Over the past 5 and 10 years to date this bank has not done as well with the 5 and 10 year total return at 9.97% and 8.53% with 6.14% and 5.05% from capital gains and 3.83% and 3.48% from dividends. For this bank the stock prices hit a low in 2009.

Because the outstanding shares have been increasing by 1.5% and 3.5% per year over the past 5 and 10 years the "per share" values, like Revenue per Share and EPS are more important to me as a shareholder than Revenue and Earnings.

For this company Revenue per Share and EPS have done well over the past 5 and 10 years with Revenue per Share up by 9.3% and 7.2% per year over the past 5 and 10 years. EPS has increased by 27.7% and 9.34% per year over the past 5 and 10 years. For this bank EPS hit a low in 2009 however revenue did not hit any lows with the 2008 bear market and subsequent recession.

By the way, revenue is up by 10.9% per year over the past 5 and 10 years. Net Income is up by 20.9% and 13.1% per year over the past 5 and 10 years.

For this bank, the Return on Equity has not been below 10% over the past 10 years. However, it has been lower in 3 years in the past 10 years. The Debt Ratio is at 1.06 which is the same as for Bank of Montreal (TSX-BMO) and Royal Bank (TSX-RY).

Sound bite for Twitter and StockTwits is: Bank Dividend Growth Stock. I think that everyone should have some exposure to banks and the financial sector. All the big Canadian banks are Dividend Growth Stock. See my spreadsheet at td.htm.

This is the first of two parts. The second part will be posted on Monday, January 19, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

The TD bank is a bank with a full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is here TD Bank.

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, January 15, 2015

Bank of Nova Scotia 2

I do not own this stock of Bank of Nova Scotia (TSX-BNS, NYSE-BNS). This is one of the big banks of Canada. All our big banks are dividend growth companies.

The insider trading report shows $28.3M of insider selling and $28.3M of net insider selling. There is a very minor amount of insider buying. Since net insider selling is 0.03% of the market cap of this stock, it is a relatively small amount.

Last year the outstanding shares were increased by 3.493M shares for stock options. This number of shares is only 0.29% of the outstanding shares and is therefore a relatively small amount. These stock options had a book value of $187M and this number of shares was worth $241M at the end of the October 2014 financial year.

There is some insider ownership with the CEO owning shares worth some $6.6M and the CFO owning shares worth some $2.6M. However, insider ownership is extremely small compared to the market cap of this bank. For example, the CEO owns 0.01% of the outstanding shares in this bank.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.64, 11.88 and 13.11. The 10 year corresponding P/E Ratios are similar at 11.03, 12.32 and 13.72. The current P/E Ratio is 10.72 based on a stock price of $61.56 and 2015 EPS estimate of $5.74. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $61.17. The 10 year low, median and high median Price/Graham Price Ratios are 0.97, 1.09 and 1.24. The current P/GP Ratio is 1.01 based on a stock price of $61.56. This stock price test suggests that the stock price is relatively reasonable.

I get a 10 year median Price/Book Value per Share of $2.16. The current P/B Ratio is 2.12 based on a stock price of $61.56 and current Book Value per Share of $28.98. The current P/B Rati is some 1.8% lower than the 10 year P/B Ratio. This stock price test suggests that the stock price is relatively reasonable.

The current Dividend Yield is 4.29%. The 5 year median, historical median and historical average Dividend Yields are all lower at 3.92%, 4.18% and 3.81%. They are lower by 9.5%, 2.7% and 12.6%. For the stock to be cheap, the current Dividend Yield would have to be lower than the historical high which is at 5.87%. This stock price test suggests that the stock price is relatively reasonable.

Prices seem to be currently moving quickly. You do not need to see a stock at the same price as I quote in my report. I have a blog entry on how to use my Stock Reviews to help you determine if the stock price is reasonable or not when the current price is different than the price I quote.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Hold as most recommendations are a Hold. The 12 month price consensus is $73.30. This implies a total return of 23.36% with 19.07% from capital gains and 4.29% from dividends.

Sound bite for Twitter and StockTwits is: Stock price seems reasonable at present. I do not see the logic in recommendations of Hold when a stock price goes down. To me good companies with low prices because of current difficulties send out signals to buy. Yes, it is risky, but is it not more risky to buy companies when they hit all-time highs? See my spreadsheet at bns.htm.

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

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is here Scotia Bank.

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, January 14, 2015

Bank of Nova Scotia

On my other blog I am today writing about Mission Statements continue...

I do not own this stock of Bank of Nova Scotia (TSX-BNS, NYSE-BNS). This is one of the big banks of Canada. All our big banks are dividend growth companies.

For this bank, the dividends were only held steady for 2009 and 2010. They also have a habit of increasing the dividends twice a year. The most recent dividend increase was for 3.1% and this occurred last year. The total increase in dividends for 2014 was 7.1%.

For this bank the dividend yield is good and the dividend increases are currently moderate. The current dividend yield is 4.29% based on a stock price of $61.56. The dividend increases are moderate at 5.5% and 8.8% per year over the past 5 and 10 years.

The Dividend Payout Ratios are also fine on this bank with a 5 year median DPR for EPS at 45% and the 2014 DPR for EPS also at 45%. If the current dividend is increased at the rate of 5.5% per year over the next 5 and 10 years, then you could earn 7.3% and 9.6% yield on stock bought today. Past dividend increases were better with a median 11.2% and 23.2% yield on stock purchased 5 and or 10 years previous.

The outstanding shares have increased at the rate of 3.5% and 1.9% per year over the past 5 and 10 years. If I were a shareholder, I would think that per share values, like Revenue per Share and Earnings per Share were more important the Revenue and Earnings. For example, the Revenue has increased by 13.2% and 9.2% per year over the past 5 and 10 years. However, Revenue per Share has only increased by 9.4% and 7.2% over the same periods.

With this bank, the Return on Equity has not been below 10% over the past 20 years. However, it has been lower in the past, for example in 1994 it was 9.4% and 7.9% in 1989. The data I have on this bank goes back to 1988.

If I had bought this bank in 1995 as I did the Royal Bank, my total return would be 18.75% per year with 12.20% from capital gains and 6.55% from dividends. It has not done was well over the past 5 and 10 years. The share price did not really change between 2013 and 2014 and the share price is down 7.2% year to date. The 5 and 10 years total return today on this sock is at 5.51% and 6.83% with 1.52% and 2.93% from capital gains and 4.00% and 3.91% from dividends.

The Debt Ratio is better on this bank at 1.07 than the same ratio for Bank of Montreal (TSX-BMO) and Royal Bank (TSX-RY) which are both at 1.06.

Sound bite for Twitter and StockTwits is: Bank Dividend Growth Stock. See my spreadsheet at bns.htm.

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

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is here Scotia Bank.

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, January 13, 2015

Royal Bank of Canada 2

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). In 1995 I bought this stock and this is the second bank stock that I have bought. At that time this stock was on Mike Higgs' list of Canadian Dividend Growth Stocks and on the dividend lists I followed as were all the banks.

When I look at insider trading I find $2.6M of insider selling and $2.6M of net insider selling. There is a very small amount of insider buying. Insider selling is 0.002% of market cap that is way under 1% of the market cap of this bank and is therefore a relatively very minor amount.

There is some insider ownership with the CEO owning shares worth around $1.6M, the CFO owning shares worth around $1.4M and the Chairman owning shares worth around 2.5M. Of course, as a percentage of the market cap insider ownership is relatively very minor.

I cannot find a mission statement on their website but statements there seem to hit all points:
  • Always earning the right to be our clients' first choice
  • We give our people the tools and support to grow and enrich their careers.
  • Our first priority is doing our jobs as bankers well, and serving our clients with integrity, every day.
  • At RBC, we also take our responsibilities in the community, marketplace, workplace and to the planet seriously.
  • We are committed to delivering excellent long-term returns to our shareholders.
I get 5 year low, median and high median Price/Earnings per Share Ratios of 11.34, 12.60 and 13.85. The corresponding 10 year Ratios are close at 11.54, 13.62 and 15.41. The current P/E Ratio is 12.01 based on a stock price of $77.48 and 2014 EPS estimate of $6.45. This stock price test suggests that the stock is priced relatively reasonable.

I get a Graham Price of $69.94. The 10 year low, median and high median Price/Graham Price Ratios are 1.03, 1.21 and 1.41. The current P/GP Ratio is 1.11 based on a stock price of $77.48. This stock price test suggests that the stock is priced relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 2.25. The current P/B Ratio is 2.30 based on a stock price of $77.48 and BVPS of $33.71. The current P/B Ratio is just 2% higher than the 10 year median. This stock price test suggests that the stock is priced relatively reasonable.

The current dividend yield is 3.87% based on a dividend of $3.00 and a stock price of $77.48. The 5 year median dividend yield is 3.91% and the historical median dividend yield is 3.92%. The current dividend yield is just 1% and 1.2% lower than these dividend yields. This stock price test suggests that the stock is priced relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $87.00. This implies a total return of 16.16% with 3.87% from dividends and 12.29% from capital gains.

In a recent report the Motley Fool thought this bank was expensive at P/E Ratio of 13.5. This Financial Post article talks about RBC selling its Swiss banking operations. Another Financial Post article talks about RBC settling a lawsuit with U.S. regulators. In July 2013 the Dividend Growth Investing and Retirement blogger did a review of this bank.

Sound bite for Twitter and StockTwits is: On my tests stock price looks reasonable. See my spreadsheet at ry.htm.

This is the second of two parts. The first part was posted on Monday, January 12, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. They are one of Canada's largest banks as measured by assets and market capitalization, and are among the largest banks in the world, based on market capitalization. They provide diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. They have personal, business, public sector and institutional clients through offices in Canada, the U.S. and 56 other countries. Its web site is here RBC.

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, January 12, 2015

Royal Bank of Canada

On my other blog I am today writing about Shareholder Value Maximization continue...

I own this stock of Royal Bank of Canada (TSX-RY, NYSE-RY). In 1995 I bought this stock and this is the second bank stock that I have bought. At that time this stock was on Mike Higgs' list of Canadian Dividend Growth Stocks and on the dividend lists I followed as were all the banks.

I have dividend information going back to 1986 for this bank. In years after 2008 is not the first time that dividends have been held steady. It would seem that this also occurred for this bank in the early 1990's. However, considering that dividends were held steady from 2008 to 2011 inclusive, the dividend growth is still moderate over the past 5 and 10 years at 6.7% and 10.6% per year.

Banks tend to raise dividend more than once within a financial year. For example in 2014 dividends were raised by 6.3% at the beginning of the period and then by another 6% half way through the year. The last dividend increase was for 5.6% at the start of 2015.

The 5 year median Dividend Payout Ratio for EPS is at 52%. The DPR for 2014 was at 46%. This stock has an historical median DPR of 39%. However, DPR for EPS has been declining since 2009 when it hit a high of 77.8%. At the same time dividend increases have been growing from the total of 4% increase of 2011 to the total 12.2% increase in 2014.

What I have noticed for the Banks is that the Debt Ratios used to be around 1.04 prior to 2008and now mostly are at 1.06. However, the Debt Ratios have varied over time. The Debt Ratios for banks have always been quite different than most other companies where you expect a good Debt Ratio to be at 1.50.

The other thing about banks is that the Leverage and Debt/Equity Ratios tend to be quite high. For this bank they are at 17.26 and 16.26 respectively in 2014. The 10 year median ratios are 17.84 and 16.84. This is pretty much normal for a bank.

The Return on Equity has been quite good for this Bank. It has not been below 10% over the past 20 years. The ROE for 2014 was 16.3% and the 5 year median ROE is at 16.2%. The ROE on comprehensive Income was 20.2% in 2014 and its 5 year median was 19.6%.

I have had this stock since 1995 and I have received $25.68 per share in dividends. The original stock price cost is at $7.26 so my share cost has long been covered by dividend income. My total return for this stock is at 18.48% per year with 14.12% from capital gains and 4.36% from dividends. I have had this stock for just over 18 years.

Sound bite for Twitter and StockTwits is: Bank Dividend Growth Stock. I expect that especially in the near future that the return on this bank will not be as good as in the past. The 5 and 10 year total return on this stock is at 12.24% and 9.40% per year with 5.17% and 5.70% from capital gains and 4.07% and 3.70% from dividends. See my spreadsheet at ry.htm.

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

Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. They are one of Canada's largest banks as measured by assets and market capitalization, and are among the largest banks in the world, based on market capitalization. They provide diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. They have personal, business, public sector and institutional clients through offices in Canada, the U.S. and 56 other countries. Its web site is here RBC.

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.