Monday, April 3, 2017

Toromont Industries Ltd

First of all I want to say that I bought an extra 100 shares of Goodfellow Inc. this morning with dividend income in my TFSA. These shares have been going south since October of 2016 and current are very cheap.

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. This dividend growth stocks has rather low yield and rather low increases so it may not satisfy some dividend growth investors. You could also expect volatility from this stock. I look to have different sorts of dividend growth stocks and this is why I have this one. That said, the stock is rather expensive presently and I would think that in future you could get it for a better than the current 1.63% yield. See my spreadsheet on Toromont Industries Ltd.

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. I also bought more 2011.

I have not done badly by this stock. I have had shares in this company for almost 10 years. I have a total return of 11.84% per year with 9.93% from capital gains and 1.91% from dividends. I have received $5.22 per share in dividends and the dividends so far has covered 19% of the cost of my stock.

They are basically a dividend growth company, but dividends have been cut in the past. The dividend yield is low as is the dividend increases. The current dividend yield is 1.63% based on dividends of $0.76 and a stock price of $46.63. The historical median dividend yield is 1.97%. The 5 and 10 year median dividend yield does reach a moderate level at 2.10% and 2.20% respectively.

The dividend growth is also low with growth at 6% and 5.9% per year over the past 5 and 10 years. The most recent dividend increase happened in 2017 and it was for 5.6%.

The Dividend Payout Ratios are low with the DPR for EPS for 2016 at 36% and a 5 year DPR at 34%. The DPR for CFPS for 2016 is at 36% and the 5 year DPR for CFPS is lower at 26%.

The thing with this industrial stock is the good debt ratios. The Debt/Market Cap Ratio for 2016 is just 0.05. The Liquidity Ratio is 2.73 for 2016 with a 5 year median of 2.27. The Debt Ratio is 2.69 for 2016 with a 5 year median of 2.26. The Leverage and Debt/Equity Ratios are 1.59 and 0.59 respectively. These are all great ratios.

A negative thing about this stock is the low growth in revenue. Revenue is up by 6.2% and .6% per year over the past and 10 years. Revenue per Share is up by 5.7% and a negative 1.4% per year over the past 5 and 10 years. The 5 year running average is down by 4.7% and .4% over the past 5 and 10 years (so revenue growth over the past 5 and 10 years is not as good as the prior 5 year periods). They suffered a 40% decrease in revenue in 2011, but since then revenue has been growing.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.97, 15.68 and 16.88. The corresponding 10 year ratios are 12.97, 14.70 and 16.52. The corresponding historical ratios are 12.78, 14.66 and 18.55. The current P/E Ratio is 21.85 based on a stock price of $46.53 and 2017 EPS estimate of $2.13. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $23.27. The 10 year low, median and high median Price/Graham Price Ratios are 1.25, 1.47 and 1.61. The current P/GP Ratio is 2.00 based on a stock price of $46.53. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 3.14. The current P/B Ratio is 4.12 based on a stock price of $46.53 and BVPS of $11.29. The current ratio is some 31% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

The historical median dividend yield is 1.97%. The current dividend yield is 1.63% based on a stock price of $46.53 and dividends of $0.76. The current yield is some 17% lower than the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Only one is a Buy and so the consensus recommendation is a Hold. The 12 month stock price is $43.71. This implies a total return of a loss of 4.43% with a capital loss 6.06% and dividends of 1.63%.

Ryan Goldsman on Motley Fool is rather negative about this stock. DPR Staff on Dasher Business Review give a more technical view of this stock. Asher Wright of Simply Wall Street talks about this company's debt coverage. See what analysts are saying about this stock on Stock Chase. They mostly like this stock.

Toromont Industries Ltd. operates one of the world's largest Caterpillar dealers, covering Ontario, Manitoba, and the majority of Nunavut and Newfoundland and Labrador. Toromont also owns Battlefield, an associated equipment rental business, and CIMCO, which is Canada's largest industrial and recreational refrigeration equipment supplier. Its web site is here Toromont Industries Ltd.

The last stock I wrote about was about was DH Corp (TSX-DH, OTC-DHIFF)... learn more . The next stock I will write about will be Russel Metals Inc. (TSX-RUS, OTC- RUSMF)... learn more on Wednesday, April 5, 2017 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks April 2017... learn more on Tuesday, April 4, 2017 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 website for stocks followed and investment notes. 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 or StockTwits.


  1. Your blogs are excellent, thank you for all of the work you put into them and your very logical approach to the subject matter. Could you expand on your reasons for purchasing Goodfellow Inc at this time? I'm curious having read your blog post in March in which you appeared to have misgivings about it.

  2. I took another look at this stock when I was updating all my stocks at the end of March. They had a problem and they seem to move to fix it. The Investment Reporter of February 2017 said that the recent drop in share price is due to much lower earnings and cash Flow. However, this largely reflects one-time items. They expect the company's earnings, cash flow and share price to recover. They say it remains a buy for long-term share price recovery and attractive dividends. I only bought another 100 shares.