Banks and Ratios

The reason to look at company ratios is that the stock price for a company tells you very little. The price of a stock certainly does not tell you if the stock is cheap or expensive. For example, a stock price of $10 on one stock could be an expensive price, but a stock price of $20 on another stock could be a cheap price. It is like all stocks have their own currency and you will need a common frame of reference in order to tell how cheap or expensive a stock is. My Spreadsheet is here.

In this entry I am only talking about the big 6 Canadian Banks of Bank of Montreal, Bank of Nova Scotia, CIBC, Royal Bank, National Bank, and TD Bank. I try to get the right information, but I cannot guarantee anything. In most of the test the CIBC bank is the one that is relatively cheaper.

The method I like best to check for a good stock price is dividend yield and this against the historical median dividend yield. What you are looking for is a current dividend yield higher than the historical dividend yield. Of the big banks that I follow, the Canadian Imperial Bank of Commerce comes off relatively better in this test. Most of the banks have a current dividend yield above the historical median dividend yield, except for BMO were the yield is low than the historical median.

For CIBC the current dividend yield is 4.93% and this historical one is 4.34% a value 13.7% high. For dividend yields, the higher the dividend yields the better the relative price of a stock is. Here is the 5 year median and historical average and historical median dividend yields based on my spreadsheets for our banks. All this data is going back to 1988.

Bank	Symbol	5 Year	Hist. Ave	Hist. Med
Bank of Montreal	BMO	4.10%	5.29%	4.29%
Bank of Nova Scotia	BNS	4.26%	5.01%	4.10%
CIBC	CM	4.53%	4.58%	4.34%
Royal Bank	RY	3.69%	4.32%	3.69%
National Bank	NA	4.17%	6.27%	3.94%
TD Bank	TD	3.53%	3.29%	3.47%

Bank	Symbol	Price	Dividend	Yield	M/C
Bank of Montreal	BMO	$97.24	$4.00	4.11%	-4.11%
Bank of Nova Scotia	BNS	$73.57	$3.40	4.62%	12.72%
CIBC	CM	$110.24	$5.44	4.93%	13.70%
Royal Bank	RY	$99.06	$3.92	3.96%	7.24%
National Bank	NA	$60.86	$2.60	4.27%	8.43%
TD Bank	TD	$72.83	$2.68	3.68%	6.05%

My next favourite test is using the Graham Price. Of the big banks I follow, the CIBC is relatively lower with the current Price/Graham Price Ratio some 19.10% below its historical median P/GP Ratio. Except for BMO, all the banks have a lower Graham Price Ratio than the median Graham Price Ratio

For the 10 year Price/Graham Price Ratios, the lower the ratio the lower the relative price of the underlying shares. This chart shows that investors are willing to pay a relatively higher price for Royal Bank stock than for other bank stocks. It also shows that generally the BMO has a relatively lower stock price.

Bank	Symbol	Low	Median	High
Bank of Montreal	BMO	0.75	0.84	0.95
Bank of Nova Scotia	BNS	0.83	0.92	1.02
CIBC	CM	0.85	0.94	1.04
Royal Bank	RY	0.92	1.03	1.14
National Bank	NA	0.77	0.88	1.02
TD Bank	TD	0.87	0.97	1.07

Bank	Symbol	Price	G.P..	P/GP Ratio	M/C
Bank of Montreal	BMO	$97.24	$113.47	0.86	2.02%
Bank of Nova Scotia	BNS	$73.57	$90.21	0.82	-11.35%
CIBC	CM	$110.24	$144.96	0.76	-19.10%
Royal Bank	RY	$99.06	$101.51	0.98	-5.26%
National Bank	NA	$60.86	$69.77	0.87	-0.88%
TD Bank	TD	$72.83	$78.56	0.93	-4.43%

One of the most common ratios to look at is the P/E Ratio. When dealing with P/E Ratios, the lower the P/E ratio the better the relatively price is. Below is the 5 year low, median, and high median P/E Ratios for each bank I follow. What this chart also tells you is that investors are willing to pay relatively more money for TD Bank shares per dollar of earnings than for other banks.

Bank	Symbol	Low P/E	Median P/E	High P/E
Bank of Montreal	BMO	10.26	11.42	12.77
Bank of Nova Scotia	BNS	10.14	11.29	12.52
CIBC	CM	9.48	10.08	10.67
Royal Bank	RY	10.85	12.09	12.92
National Bank	NA	9.63	10.62	12.21
TD Bank	TD	11.40	12.41	13.33

So, what is the relatively cheapest bank today? Currently CIBC has the lower P/E Ratio. In the last column I am comparing the Historical Median P/E with the Current P/E. This measure shows that all the banks are below the median as far as P/E goes. CIBC has the lowest relative P/E Ratio.

Bank	Symbol	Price	2019 EPS Est.	Curr P/E	M/C
Bank of Montreal	BMO	$97.24	$8.84	11.00	-3.68%
Bank of Nova Scotia	BNS	$73.57	$7.27	10.12	-10.37%
CIBC	CM	$110.24	$12.65	8.71	-13.55%
Royal Bank	RY	$99.06	$8.96	11.06	-8.55%
National Bank	NA	$60.86	$6.29	9.68	-8.89%
TD Bank	TD	$72.83	$6.78	10.74	-13.44%

The next most common ratio is the Price/Book Value per Share Ratio. For Price/Book Value per Share Ratio, 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.

When valuing a stock, the lower the P/B Ratio is, the better the stock price is on a relative basis. The 10 year median P/B Ratios for our banks are below in the first table. From this it is obvious that historically, investors were willing to pay a relatively higher price for Royal Bank shares than other shares. It could also say that the Bank of Montreal offers the best deal when it comes to Book Value per Share.

Of the banks I follow, BNS has the lowest P/B Ratio and the CIBC is the lowest relative to its 10 year P/B Ratio as its current P/B Ratio is some 22% lower than the 10 year P/B Ratio.

Bank	Symbol	P/B
Bank of Montreal	BMO	1.45
Bank of Nova Scotia	BNS	1.85
CIBC	CM	1.92
Royal Bank	RY	1.98
National Bank	NA	1.74
TD Bank	TD	1.61

The next chart shows that CIBC has relatively to the 10 year ratio, the lowest ratio.

Bank	Symbol	Price	BVPS	Current P/B	M/C
Bank of Montreal	BMO	$97.24	$64.73	1.50	3.60%
Bank of Nova Scotia	BNS	$73.57	$49.75	1.48	-20.07%
CIBC	CM	$110.24	$73.83	1.49	-22.23%
Royal Bank	RY	$99.06	$51.11	1.94	-2.11%
National Bank	NA	$60.86	$34.40	1.77	1.68%
TD Bank	TD	$72.83	$40.45	1.80	11.83%

CIBC seems to come out well in this testing, but it is my least favourite bank and one I would probably not buy. If you want a copy of my spreadsheet, just email me. You just need to put in the current stock prices in the second boxed area and the spreadsheet will do the rest. Spreadsheet would be good for a year.

On my other blog I wrote yesterday about Valener Inc (TSX-VNR, OTC-VNRCF) ... learn more. Next, I will write about Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more on February 1, 2019 around 5 pm.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Energy Stocks

This article entitled Oil and Gas – ‘tis the season to be jolly on Advice for Investors covers Suncor (TSX-SU), Canadian Natural Resources (TSX-CNQ), Enbridge Inc (TSX-ENB), TransCanada Corp (TSX-TRP), AltaGas (TSX-ALA), Pembina Pipeline (TSX-PPL) and STEP Energy Services (TSX-STEP).

The article talks about the Money Letter which recently surveyed the oil and gas market which has traditionally been kind to investors from last November to early May.

On my other blog I wrote yesterday about Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. Next, I will write about Valener Inc (TSX-VNR, OTC-VNRCF) ... learn more on Wednesday, January 30, 2019 around 5 pm.

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Dividend Yield and Growth

I decided to look at a variety of dividend yields and growth on a variety of stocks. The first stock is a REITs, next I looked at a three of banks, with the next being a construction firm (Industrial) and the last two being utility stocks. I own all these stocks.

Basically, I think that this shows why you want dividend growth stocks. I have a variety of low, median, and high yield stocks. I aim to make a yield on my portfolio of 3.5% and beat inflation on dividend growth. My dividends grew 11.1% in 2018 to the end of November 2018.

Also, it would seem that companies change their combination of dividend yield and dividend growth over time.

The following figures are from RioCan Real Estate (TSX- REI.UN, OTC-RIOCF). I have had this stock for 18 years and I am earning 17.22% yield on my original purchase price. This is REIT has moderate to high yields and low dividend growth. The historical yield is so high because this REIT used to have higher yields until around 2008.

From	Years	Div. Gth		Period	Yield
2013	5	0.42%		Current Yield	6.13%
2008	10	0.56%		5 year Median Yield	5.35%
2003	15	1.56%		10 year Median Yield	5.47%
1998	20	2.09%		Historical Median Yield	7.47%
				20 years yield on original price	15.13%

The following figures are from Bank of Montreal (TSX- BMO, NYSE-BMO). I have had this stock for 36 years and I am earnings 54.27% yield on my original purchase price. The banks has moderate dividend yields and low dividend growth.

From	Years	Div. Gth		Period	Yield
2013	5	4.96%		Current Yield	4.43%
2008	10	2.88%		5 year Median Yield	4.10%
2003	15	7.04%		10 year Median Yield	4.38%
1998	20	7.47%		Historical Median Yield	4.47%
				20 years yield on original price	13.32%

The following figures are from Royal Bank of Canada (TSX- RY, NYSE- RY). I have had this stock for 24 years and I am making 54.99% yield on my original purchase price. This bank has moderate dividend yields and low to moderate dividend growth.

From	Years	Div. Gth		Period	Yield
2013	5	7.27%		Current Yield	4.18%
2008	10	6.96%		5 year Median Yield	3.69%
2003	15	9.46%		10 year Median Yield	3.92%
1998	20	11.19%		Historical Median Yield	3.92%
				20 years yield on original price	21.84%

The following figures are from Toronto Dominion Bank (TSX-TD, NYSE-TD). I have had this stock for 24 years and I am making 14.92% yield on my original purchase price. This bank has moderate dividend yields and moderate dividend growth.

From	Years	Div. Gth		Period	Yield
2013	5	10.01%		Current Yield	3.89%
2008	10	8.26%		5 year Median Yield	3.53%
2003	15	10.55%		10 year Median Yield	3.62%
1998	20	10.89%		Historical Median Yield	3.50%
				20 years yield on original price	17.43%

The following figures are from SNC-Lavalin Group Inc. (TSX- SNC, NYSE- SNC). With this stock after 20 years, I am making 33.76% on my original stock price. This Industrial has low dividend yields and low to moderate dividend growth. Dividend yield was high until 2011 and then it switched to low growth.

From	Years	Div. Gth		Period	Yield
2013	5	4.41%		Current Yield	2.05%
2008	10	10.84%		5 year Median Yield	2.05%
2003	15	15.65%		10 year Median Yield	2.26%
1998	20	15.00%		Historical Median Yield	1.47%
				20 years yield on original price	29.37%

The following figures are from Emera Inc (TSX- EMA, OTC-EMRAF). On this one, I am making 12.40% yield on my original stock price after 13 years. This bank has moderate dividend yields and low to moderate dividend growth. This stock started off with a high dividend yield and low dividend growth, but it has had a few years of high dividend growth. Dividend yields are now in the moderate range.

From	Years	Div. Gth		Period	Yield
2013	5	9.37%		Current Yield	5.68%
2008	10	9.01%		5 year Median Yield	4.28%
2003	15	6.24%		10 year Median Yield	4.26%
1998	20	4.96%		Historical Median Yield	4.77%
				20 years yield on original price	13.29%

The following figures are from Enbridge Inc (TSX- ENB, NYSE-ENB). On this one, I am making 14.94% yield on my original stock price after 12 years. This company has had moderate dividend yields with high growth. It is only recently that the company has had a high dividend yield.

From	Years	Div. Gth		Period	Yield
2013	5	16.33%		Current Yield	7.17%
2008	10	15.06%		5 year Median Yield	3.48%
2003	15	13.25%		10 year Median Yield	3.27%
1998	20	11.96%		Historical Median Yield	3.49%
				20 years yield on original price	33.42%

On my other blog I wrote yesterday about Transcontinental Inc (TSX-TCL, OTC-TCLAF) ... learn more. Next, I will write about Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more on Friday, January 25, 2019 around 5 pm.

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Why Low Yield Stocks

I have been asked why I would have low yield stocks when I life off my dividends. Compare MRU, CNR and HR yield after 20 years. In the table below, I show what I consider to be low, moderate, and good dividend yields and what I consider to be low, moderate, and good dividend growth.

Yield	Range		Growth	Range
Low	0% to 1%		Low	0% to 7%
Moderate	2% to 4%		Moderate	8% to 14%
Good	5% to 6%		Good	15% and over

Stocks tend to have low yield and good growth, or good yield and low growth or moderate yield and moderate growth. Of course, this is only a tendency. Also, it counts how much you paid for your stock relatively speaking. My 20 years yield on original price assumes that you made a median price for the stock.

The following figures are from Metro Inc (TSX-MRU, OTC-MTRAF). I have had this stock for 15 years and I am earning 12.22% yield on my original purchase price. If I had bought this stock 20 years ago, I would be making 21.35% on my original purchase.

From	Years	Div. Gth		Period	Yield
2013	5	16.91%		Current Yield	1.52%
2008	10	15.71%		5 year Median Yield	1.46%
2003	15	14.82%		10 year Median Yield	1.47%
1998	20	16.32%		Historical Median Yield	1.45%
				20 years yield on original price	21.35%

The following figures are from Canadian National Railway (TSX- CNR, NYSE- CNI). I have had this stock for 13 years, and I am making 10.09% yield on my original purchase price. If I had bought this stock 20 years ago, my yield on my original cost would be 27.41%.

From	Years	Div. Gth		Period	Yield
2013	5	16.18%		Current Yield	1.87%
2008	10	14.74%		5 year Median Yield	1.78%
2003	15	17.24%		10 year Median Yield	1.61%
1998	20	16.33%		Historical Median Yield	1.57%
				20 years yield on original price	27.41%

The following figures are from H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF). I do not own this stock. If I had bought this stock 20 years ago, my yield on my original cost would be 13.05%.

From	Years	Div. Gth		Period	Yield
2013	5	16.18%		Current Yield	1.87%
2008	10	14.74%		5 year Median Yield	1.78%
2003	15	17.24%		10 year Median Yield	1.61%
1998	20	16.33%		Historical Median Yield	1.57%
				20 years yield on original price	27.41%

On my other blog I wrote yesterday about Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more. Next, I will write about Transcontinental Inc (TSX-TCL, OTC-TCLAF) ... learn more on Wednesday, January 23, 2019 around 5 pm.

Also, on my book blog I have put a review of the book 21 Lessons for the 21st Century by Yuval Noah Harari. learn more...

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Long Term Returns

Say you bought just over $1000 ($1,000.40) worth of stock 42 years ago in TD bank you would currently have shares of 1220. Your shares would be worth $84,021.40 and you would have collected another $34,187.27 in dividends.

If you bought Metro Inc (TSX-MRU), 25 years ago and paid just over $1,000 ($1007.25) for shares, you would currently have 1275 shares that are worth $ $60,358.50 and you would have collected dividends of $6,390.22.

If you had bought Bank of Nova Scotia (TSX-BNS) 25 years ago for around $1,000 ($997.50) you would today have 280 shares worth $19,958.40. You would also have collected $10,987.20 in dividends.

On my other blog I wrote yesterday about Bank of Nova Scotia (TSX-BNS, NYSE-BNS) ... learn more. Next, I will write about National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more on Friday, January 18, 2019 around 5 pm.

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Choice Properties REIT

Advise for Investors have published an article about this REIT. I got some of this REIT because I owned Canadian REIT. They rate this REIT as a current buy. The article talks about Loblaws spinning off Choice Properties and this being bought by George Weston Ltd.

Another article on this is by the Canadian Press on the Financial Post and by Rachelle Younglai and Marina Strauss in the Globe and Mail

On my other blog I wrote yesterday about Toronto Dominion Bank (TSX-TD, NYSE-TD) ... learn more. Next, I will write about Bank of Nova Scotia (TSX-BNS, NYSE-BNS) ... learn more on Wednesday, January 16, 2019 around 5 pm.

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Why Buy Food Stocks

In November of last year Daily Adviser from MPL Communications talk about why to buy food stocks. Four stocks of High Liner Foods (TSX-HLF), Loblaw Companies (TSX-L), Metro Inc. (TSX-MRU) and Saputo Inc. (TSX-SAP) are Key stocks for them.

I own both Metro Inc and Saputo Inc. I recently reviewed Metro Inc (TSX-MRU, OTC-MTRAF) ... here. You can see from the following table that shareholders have done fine with this stock. The lowest total return period was for 15 years and it was 14.76% with 13.27% from capital gains and 1.48% from dividends. A high percentage of the return is in capital gains, but dividend increases, as shown in the second column are quite good. Data is to the end of September 30, 2018 financial year.

From	Years	Div. Gth	Tot Ret	Cap Gain	Div.
2013	5	16.91%	18.74%	16.96%	1.78%
2008	10	15.71%	15.98%	14.40%	1.58%
2003	15	14.82%	14.76%	13.27%	1.48%
1998	20	16.32%	16.00%	14.44%	1.56%
1993	25	20.31%	18.77%	16.97%	1.80%
1992	26		18.78%	17.05%	1.73%

For Saputo Inc. (TSX-SAP, OTC-SAPIF) chart below shows the same sort of information to the end of the March 2018 financial year. Here again most of the total return is capital gains. Their dividend growth until recently was good and in the past 5 years have dropped to moderate.

From	Years	Div. Gth	Tot Ret	Cap Gain	Div.
2013	5	8.97%	14.12%	12.43%	1.69%
2008	10	20.78%	13.43%	11.72%	1.71%
2003	15	10.50%	16.14%	14.14%	2.00%
1998	20	13.05%	15.97%	14.20%	1.77%

I follow High Liner Foods (TSX-HLF, OTC-HLNFF). The following chart shows information to the end of 2017. They have been paying dividends since 2004. Their dividend growth is good. The total return dropped for the last 5 years because the stock price fell in 2016 and 2017. They have a checkered pass for total returns.

From	Years	Div. Gth	Tot Ret	Cap Gain	Div.
2012	5	21.89%	1.77%	-1.22%	2.99%
2007	10	18.91%	15.28%	11.88%	3.40%
2002	13-15	14.25%	11.46%	8.95%	2.51%
1997	20		7.70%	6.14%	1.55%
1992	25		6.56%	5.38%	1.17%
1997	30		-2.20%	-2.84%	0.64%
1983	33		0.72%	0.07%	0.65%

The last stock is Loblaw Companies (TSX-L, OTC-LBLCF) and the chart is below with information to the end of 2017. I owned this stock from 1996 to 2007. I sold it in 2007 because they had flatted their dividend and it did not look like they would have their new supply management system working anytime soon.

From	Years	Div. Gth	Tot Ret	Cap Gain	Div.
2012	5	4.71%	12.20%	10.22%	1.98%
2007	10	2.45%	9.21%	7.21%	2.00%
2002	15	5.49%	3.78%	1.57%	2.21%
1997	20	9.97%	2.93%	1.69%	1.24%
1992	25	10.93%	12.32%	9.86%	2.46%
1999	27	10.63%	11.55%	9.33%	2.22%

On my other blog I wrote yesterday about Rogers Sugar Inc (TSX-RSI, OTC-RSGUF) ... learn more. Next, I will write about Calian Group Ltd (TSX-CGY, OTC- CLNFF) ... learn more on Friday, January 11, 2018 around 5 pm.

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 site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.