Dividend Stock Analysis: Industrial Alliance Insurance & Financial Services (TSE: IAG)
For todays pick, I had my wife randomly pick a ticker out of a list, and lo and behold she picked out Industrial Alliance (TSE: IAG) canada's 4th largest insurance company. I had thought about including this stock when I had analyzed Manulife Financial and Sunlife Financial, but decided not to, since it wasn't as big a player as the other two. Let's see how IAG stacks up as a dividend based stock.
About the company:
Here is Industrial Alliance's description of what they do, which can be found on their website here
The fourth largest life and health insurance company in Canada, Industrial Alliance is at the head of a large financial group, which has operations across Canada as well as in the Western United States."
What the professionals think:
| Source | Value | Score |
|---|---|---|
| Is it a Dividend Aristocrat: | Yes | 0.5 |
| Is it a Dividend Achiever: | Yes | 0.5 |
| Globe Investor Rating: | 4 Stars | 0.25 |
Score: 1.25/1.5
Dividend performance:
Dividend Information acquired at DividendInvenstors.ca
| Measurement | Value | Measurement | Value |
|---|---|---|---|
| Dividend Rate: | $0.98 | Quarterly Dividend Rate: | $0.245 |
| Current Dividend Yield: | 2.80% | 5 yr. Avg. Dividend Yield: | 1.70% |
| 3 yr. Dividend Growth: | 24.62% | 5 yr. Dividend Growth: | 19.01% |
| Payout Ratio: | 28.00% | 5 yr. Historic Payout Ratio: | 24.00% |
| Measurement | Value | Score |
|---|---|---|
| Is current Yield > Avg Yield: | Yes | 1 |
| > 10% dividend growth per year: | Yes | 1 |
| > 5 yrs of dividend growth: | Yes | 1 |
| payout ratio <= historic payout ratio: | No | 0 |
Score: 3.0/4.0
Fundamentals:
All fundamentals based on 2007 annual report, and the latest market close share price of $35.49
| Measurement | Value | Score |
|---|---|---|
| Earnings per share (EPS): | 3.10 | - |
| Is EPS growing: | Yes | 0.5 |
| Net Profit Margin: | 0.05 | - |
| Is Net Profit Margin growing: | Yes | 0.5 |
| Price/Book Ratio (P/B) < 0.80: | 1.58 | 0 |
| Price/Earnings Ratio (P/E) < 15: | 11.45 | 0.5 |
| Price/Sales Ratio (P/S) < 1.5: | 0.57 | 0.5 |
| Is the Graham Number > stock price: | $39.54 | 1 |
Score: 3.0/3.5
Technicals:
Chart Acquired at StockCharts.com
| Measurement | Value | Score |
|---|---|---|
| 200 day Simple Moving Average direction: | Down | 05 |
| Indicators show a good time to buy (MACD, SSTOCH, RSI): | Yes | 0.5 |
Score: 0.5/1.0
Total Score: 7.75/10
Notes:
- On the Daily SMA(200) the direction is down, but when you look at the weekly chart, it is on an upward slope, which shows the long term trend going in the right direction
Summary:
I was really surprised as I went through the fundamental analysis on IAG, first having a Price to Sales ratio well below my target (thats a good thing), and next having a graham number below its actual stock price. This means that we are seeing a stock that is undervalued in the market. So we definitly have a good buying opportunity here. Industrial Alliance has a strong history of increasing its dividend, although I usually prefer the dividend yield to be higher then what I can make in a high interest savings account,it is close enough that I don't see it as being that strong of a deterrent. As noted, the charts look favorable, so all together, I think that at this time IAG is a good pick for any dividend investor that needs to fill an issurance / financial services gap in their portfolio.
Recommendation:BUY
Full Disclosure: I currently do NOT own shares in Industrial Alliance Insurance & Financial Services (TSE: IAG)
Disclaimer: Any information contained in the above article represents my opinions only, and should not be construed as personalized investment advice. I cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of the article bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice.
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