IGM Financial (Symbol-IGM)

[Shakespeare]

The stock symbol has been changed from IGI to IGM.

[yielder]

Still a buy.

Still cheap on a multiple and yield basis and using an earnings growth rate of 10.9% which is below the five year growth rate of 12.4%. Dividend growth over the past five years has been 14.4% with a payout ratio around 50%. Debt/equity is 35%, down from 44% last year and 69% in 2001. Sales, earnings and cash flow over the past ten years are virtually a straight line. Even though the price has risen from $25 in March of 2003 to its current $39, the multiple expansion from a low of 13.2 to the current 17.4 is still below its average of 19.

[adrian2]

I would not rush in. I think the heydays of Investors Group are behind it. The growth in mutual fund industry is slowing, maybe substantially, and within the industry IG is far from the best in the bunch, even though that may be the biggest.

How much would you pay in terms of P/E if growth for the next years is cut in half (5%)? What if earnings are flat for the next five years?

It may be a good reason why the P/E is lower than previous averages; IMO it should be lower still. I don't see it having better growth prospects compared to the banks.

[yielder]

Who knows? You may be right. When I look at a stock, I look at the past with an emphasis on the near past, the current situation, and what I think the near future might be. To go beyond that gets into the realm of guessing. Your thoughts on IGM may be spot on the money but there's no evidence of that right now. Until IGM stumbles, it's a buy.

Mike

[scomac]

I would not rush in. I think the heydays of Investors Group are behind it. The growth in mutual fund industry is slowing, maybe substantially, and within the industry IG is far from the best in the bunch, even though that may be the biggest.

Intuitively, what you have stated, adrian2, would appear to be the correct analysis. However, I continue to be amazed at the consistent growth of revenue and earnings this company delivers to its shareholders. While they may not be the best fundco in terms of the quality of their offerings to the investing public, they clearly are the best at growing their business --- that's why they are the biggest. Right or wrong, the mutual fund industry is all about marketing and service. IGM continues to set the standard in both regards. That's why I own it.

Scott

[Shakespeare]

I wouldn't touch the funds, but I do own the stock.

It's pretty clear which side benefits from their marketing.

[Over50]

There has been some upward movement over the last week, a couple of bucks or so. This is well past the annual RRSP sales report, so is this increase a result speculation regarding conversion to income trust?

[yielder]

Buy the fundco not the fund.

[url=https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20060523/RFUNDWATCH23]IGM, Canada's largest fund company, which is controlled by Montreal's Desmarais family, has a stellar track record. Sales growth is strong, especially within recent acquisitions Mackenzie Financial Corp. and Investment Planning Counsel Inc. On the Toronto Stock Exchange, IGM shares have a 10-year compound annual return of 22.4 per cent for the period ended Dec. 31.

The results of the Investors Dividend Fund, the largest retail fund in Canada, pale in comparison. The fund reported a compound annual return of 10.3 per cent during the same 10-year period, about half the gains enjoyed by IGM shareholders. The fund's returns also fall well below the 11.99-per-cent annual average for the Canadian dividend fund asset class over the past decade.[/url]

[Bylo Selhi]

Iggy launches Big Mac attack, eats Cundill
Thu Aug 3, 9:12 AM

TORONTO - Mackenzie Financial Corp., a unit of IGM Financial Inc. , said on Thursday it agreed to acquire all the assets of Cundill Investment Research Ltd. and its related businesses. Mackenzie, which did not disclose financial terms of the deal, said the acquisition is expected to close in the third quarter and Cundill's investment management team will operate as a separate division of Mackenzie.

Under its long-standing alliance with Mackenzie, Cundill is currently a sub-advisor to over C$12.5 billion ($11 billion) in assets of the Mackenzie Cundill mutual funds and other Mackenzie instruments. The Cundill Group also manages over C$3 billion of institutional and high net worth mandates to a global client base.

[investor99]

IGM just came out with December mutual fund sales and I'm guessing the stock reacted down over 2% because reported 'net new money' was lower. Funds under management are at record levels.

I have a buy price of $42 on this stock however I am beginning to think that is a bit conservative. This is a stock I want buy at some point, however if it's cheap now, I don't want to let it get away.

Reasons I want to own it for the long haul:

Demographics - I believe the next 10 years or so will be very good for the industry as a whole.

Debt is low, ROE and ROA are strong.

Industry Leader in Canada with great brands.

I like the dynamics of the industry. Cashflow is multiplied when MERs are paid on rising assets under management.

Great (albeit short) dividend growth history.

Looks like they will probably raise the dividend in March, 2007 to probably about $0.43 / share (a 3.5% yield on today's price).

The last year it has returned a measly 0.46%. It looks like 2006 was the worst year for share appreciation on record, while the dividend is approaching a 25% gain in the same timeframe.

Maybe it's not cheap enough to get in yet? Still seems a little rich on a P/E basis.

What are other holders or watchers opinions on this one?

[yielder]

IGreat (albeit short) dividend growth history.

Maybe it's not cheap enough to get in yet? Still seems a little rich on a P/E basis.

Relative to what? Over the past 10 years, the high PE has ranged from 34.6 in 1997 to 15.9 in 2003. With a 10 year average PE of 18, it's not particularly cheap or expensive at a current PE of 17.

If you want it to be cheap, then you probably have to wait for a down market and/or an earnings stumble. Doing that means that you miss the dividend growth which has averaged 16% over the past five years.

Disclosure: I have a position. This is not a recommendation to buy or sell. People should do their own research and make their own decisions, ie, I'm not responsible for what you do.

[investor99]

My mistake regarding the dividend history, the chart I was using only had it back to 2002. Has this company traded under a different symbol previously? Different name?

I had it trading at a low P/E of 10.9 at one point. I see your point regarding downturn etc. Maybe I should wait for an earnings miss

[uhoh]

Has this company traded under a different symbol previously? Different name?

yes, at the top of this page there's a post that says the symbol changed 2 years or so ago from IGI to IGM ...

[adrian2]

Over the past 10 years, the high PE has ranged from 34.6 in 1997 to 15.9 in 2003. With a 10 year average PE of 18, it's not particularly cheap or expensive at a current PE of 17.

Do you mean high P/E for the year?

TD Waterhouse has an FP report with the following data on average yearly P/E:

2005 15.60
2004 15.08
2003 13.61
2002 14.30
2001 21.31
2000 15.40
1999 19.42

The current number of 17 is higher than the average of any year since the bubble era.

If you want it to be cheap, then you probably have to wait for a down market and/or an earnings stumble. Doing that means that you miss the dividend growth which has averaged 16% over the past five years.

Exactly my thoughts. Personally, I'm content to wait.

[yielder]

Do you mean high P/E for the year?

I'm content to wait.

Having bought in January 2003, I'm content to hold for the dividend growth.

[andyt]

IGMs 10 year Highest Yield is 2.50%, 10 Year Lowest 1.50% and 10 Year Average 2.00%. Toaday's yield is 3.28%, 0.78% above it's 10 Year Highest Yield..

If it were to fall to $42.00, the yield would be 3.79%. A March 2007 Dividend increase (as investor 99 suggested) to $1.72 would yield 4.1% at $42. At the current price of $48.00, yield would be 3.58%. Well above the 10 Year Highest.

As Tom Connolly wrote in Dec 2004 "Sometimes I think, with these dividend growth stocks, you can buy them at just about any price. As long as the dividend keeps growing in the double digits, the price has to increase........eventually"

For me a five year dividend growth of 16% annually, represents an increasing income stream which will, eventually push up the share price. A win win situation that I cannot afford to miss.

All The Best Of Luck
andyt

[investor99]

IGMs 10 year Highest Yield is 2.50%

are you sure, check 2003

0.96 cents on $24 / share = 4.0%

[andyt]

investor99

I got my information from

http://www.dividendgrowth.org/DivReport ... 123106.pdf

Connolly shows an average yield of 3.14%.

I checked IGM at fpinfomart and they show a 2003 dividend of 0.99 with a stock price high of $32.00 and a low of $23.60, yielding 4.20%.

This means you are correct and I am wrong. IGM is selling off nicely today, off $1.25 to $47.29, yielding 3.36%.

Hats Off to You
andyt

[investor99]

Forward yield, assuming a regular dividend increase, is now pushing 3.7%.

P/E is now = 16.5

I may pick some up tomorrow if this continues.

Yielder, great charts.....very practical.

[MidniteGardener]

A $10,000 paper trade Jan 2, 2001.



Transaction Record

[investor99]

wow

In other words

Initial Investment = $10,000
Dividends Paid = Over $2,000
Current Value = ~$18,000

[silverm]

Forward yield, assuming a regular dividend increase, is now pushing 3.7%.

P/E is now = 16.5

I may pick some up tomorrow if this continues.

Me too. I plan to add to my existing position. And then, 10 years from now, I'll kick myself for not buying more.

[bbsj]

Sooner or later the mutual fund industry in Canada will be forced to have reasonable MERs just like the brokers have been forced to reduce their commissions. So, one has to take this into account when buying stocks like IGM.

If you look at their total picture over the years, they have charged excessive commissions to their mutual fund clients and have returned very little to them. It can not go on for ever unless we have reason to believe that most mutual fund buyers are dumb.

[investor99]

Filled @ 46.99.

[boib22]

On Jan 3rd IGM reported sales and assets under management. Investors obviously didn’t like what they saw as they have been dumping the stock ever since.

Although the formula for success it to buy when everyone else is selling it might be prudent to see how far this puppy will drop before it hits the bottom.

It took IGM 10 weeks to fight its way from 46 to 50 and 3 days to get back.

Could it be the FWF effect with all the investors selling off mutual funds and switching to DIY investing.