Is it a good company at a reasonable price? This stock has a good dividend over 5%. Some people think that investing in high dividend stocks, especially for people needing income is a good idea. Personally, I do like dividend growth stocks but when you hold stocks for long times, the companies do go through a number of changes. It is interesting that this stock has been rather cyclical and is coming off it last high. If you like this stock, I would be cautious because even though it is testing as reasonable, it is still above the median.
I do not own this stock of IGM Financial Inc (TSX-IGM, OTC-IGIFF). I am following this stock because I used to own this stock. The stock was on Mike Higgs' list of dividend growth stocks and on the other Dividend lists at that time. I owned this stock from 2006 to 2011. I sold because I decided to rationalizing my portfolio. Selling ones that did not make it into my core and buying ones that did of the same type. My son still owns this stock. Also, I own Power Corp which in turn owns IGM.
When I was updating my spreadsheet, I noticed that people who held this stock for the past 10 years have done better to the end of 2024, than to the end of 2023. See the results below of holding this stock for 10 years to the end of 2024 and 2023. For those holding the stock for 10 years to the end of 2023 there was a capital loss and for those holding the stock for 10 years to 2024 there is a capital gain.
If you had invested in this company in December 2014, for $1,032.75 you would have bought 25 shares at $41.31 per share. In December 2024, after 10 years you would have received $562.50 in dividends. The stock would be worth $1,147.75. Your total return would have been $1,710.25. This would be a total return of 6.28% per year with 1.06% from capital gain and 5.22% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $41.31 | $1,032.75 | 25 | 10 | $562.50 | $1,147.75 | $1,710.25 |
If you had invested in this company in December 2013, for $1,009.62 you would have bought 18 shares at $56.09 per share. In December 2023, after 10 years you would have received $403.18 in dividends. The stock would be worth $630.18. Your total return would have been $1,033.38. This would be a total return of 0.28% per year with 4.60% from capital loss and 4.89% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $56.09 | $1,009.62 | 18 | 10 | $403.20 | $630.18 | $1,033.38 |
The current dividend yield is good with dividend growth non-existent. The current dividend yield is good (5% to 6% ranges) at 5.07%. The 5 and 10 year median dividend yields are also good at 6% and 5.97%. The historical median dividend yield is moderate (2% to 4% ranges) at 4.37%. The last dividend increase was in 2015. I have data for 34 years and of those years the dividends were raised in 21 years, mostly before 2012.
The Dividend Payout Ratios (DPR) are too high still. The DPR for 2024 for Earnings per Share (EPS) is too high at 57% with 5 year coverage at 57%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is too high at 57% with 5 year coverage at 62%. The DPR for EPS and AEPS is better in the 40% range. The DPR for 2024 for Cash Flow per Share (CFPS) is too high at 54% with 5 year coverage at 63%. The DPR for CFPS is better at 40% or less. The DPR for 2024 for Free Cash Flow (FCF) is too high at 62% with 5 year coverage at 74%. There is no agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 57.25% | 57.19% |
| AEPS | 56.96% | 62.04% |
| CFPS | 54.46% | 63.58% |
| FCF | 62.26% | 73.96% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.22 and currently at 0.23. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.64 and currently at 0.64 because this is a more important one for a Financial. The Liquidity Ratio for 2024 is good at 2.43 and 2.43 currently. The Debt Ratio for 2024 is good at 1.61 and 1.61 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.63 and 1.63 and currently at 2.63 and 1.63.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.22 | 0.23 |
| Lg Term R A | 0.64 | 0.64 |
| Intang/GW | 0.36 | 0.37 |
| Liquidity | 2.43 | 2.43 |
| Liq. + CF | 3.00 | 2.68 |
| Debt Ratio | 1.61 | 1.61 |
| Leverage | 2.63 | 2.63 |
| D/E Ratio | 1.63 | 1.63 |
The Total Return per year is shown below for years of 5 to 34 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 0.00% | 9.85% | 4.26% | 5.59% |
| 2014 | 10 | 0.46% | 6.28% | 1.06% | 5.22% |
| 2009 | 15 | 0.62% | 5.54% | 0.53% | 5.01% |
| 2004 | 20 | 3.41% | 6.18% | 1.13% | 5.04% |
| 1999 | 25 | 6.29% | 8.92% | 3.26% | 5.66% |
| 1994 | 30 | 9.21% | 12.26% | 5.71% | 6.56% |
| 1990 | 34 | 9.59% | 16.25% | 8.16% | 8.10% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.31, 9.58 and 12.17. The corresponding 10 year ratios are 9.43, 11.24 and 12.69. The corresponding historical ratios are 12.54, 14.90 and 17.39. The current P/E Ratio is 10.27 based on a stock price of $44.40 and EPS estimate for 2025 of 4.33. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.43, 10.27 and 12.61. The corresponding 10 year ratios are 9.27, 11.20 and 12.88. The current P/AEPS Ratio is 10.14 based on a stock price of $44.40 and AEPS estimate for 2025 of $4.38. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $57.10. The 10-year low, median, and high median Price/Graham Price Ratios are 0.77, 0.93 and 1.07. The current P/GP Ratio is 0.78 based on a stock price of $44.40. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.71. The current P/B Ratio is 1.34 based on a Book Value of $7,870M, Book Value per Share of $33.09 and a stock price of $44.40. The current ratio is 22% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Book Value per Share estimate for 2025 of $34.45. This implies a ratio of 1.29 based on a stock price of $44.40 and Book Value of $8,195M. This ratio is 24% below the 10 year P/B Ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 11.64. The current P/CF Ratio is 13.14 based on a stock price of $44.40, Cash Flow per Share estimate for 2025 of $3.38 and Cash Flow of $804M. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 4.37%. The current dividend yield is 5.07% based on a stock price of $44.40 and Dividends of $2.25. The current dividend yield is 16% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, this test does work better on dividend growth stocks and the dividend on this stock has been flat for some time.
I get a 10 year median dividend yield of 5.97%. The current dividend yield is 5.07% based on a stock price of $44.40 and Dividends of $2.25. The current dividend yield is 15% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, this test does work better on dividend growth stocks and the dividend on this stock has been flat for some time.
The 10-year median Price/Sales (Revenue) Ratio is 2.81. The current P/S Ratio is 2.91 based on Revenue estimate for 2025 of $6,634M, Revenue per Share of $15.28 and stock price of $44.40. The current ratio is 3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable but above the median. The 10 year median dividend yield tests says that the price is reasonable but above the median. The problem is that this test is best when dividend increases and not flat like for this stock. The P/S Ratio tests says that the stock price is reasonable and above the median. This is a good test. Most of the rest of the testing is saying that the stock price is reasonable and below the median, with one test saying it is cheap and another reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1) and Hold (4). The consensus is a Buy. The 12 month stock price consensus is $51.14 with a high of $56.00 and low of $47.00. The consensus stock price of $51.14 implies a total return of 20.25% with 15.18% from capital gains and 5.07% from dividends.
There is only one entry on Stock Chase for this stock in 2024 and the analysts says Do Not Buy, with best stock of POW, GWO and IGM being GWO. Note that POW owns GWO and IGM. Stock Chase gives this stock 4 stars out of 5. In 2023, there were more entries and a mix to Buy, Hold and Do Not Buy. Amy Legate-Wolfe on Motley Fool thinks you should buy this stock for passive income as the dividend is reliable.. Jitendra Parashar on Motley Fool thinks this is also a good passive income stock. The company put out a press release via Newswire about their fourth quarter for 2024.
Simply Wall Street via Yahoo Finance talks about the 2024 earnings being in line with analysts’ expectations. Simply Wall Street has no warnings out on this stock. Simply Wall Street gives this stock 4 stars out of 5.
IGM Financial is the largest non-bank-affiliated asset manager in Canada. The firm is part of the Power Financial group of companies, which holds a 62% equity stake in IGM Financial as well as stakes in Great-West Life, London Life, and Canada Life. IGM has two main operating divisions of asset management and wealth management that provide investment management products and services. Its web site is here IGM Financial Inc.
The last stock I wrote about was about was ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more. The next stock I will write about will be Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more on Wednesday, February 19, 2025 around 5 pm. Tomorrow on my other blog I will write about Best Dividends Stocks 2025.... learn more on Tuesday, February 18, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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