This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
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One thing I have learned about investing is that it is often better to invest in the companies providing investment advice and funds as opposed to investing in those funds themselves. I have been successful as an investor in Investor’s Group (IGM.to), who offers investment advice and mutual funds to millions of clients in Canada. A company that does something similar in the U.S. is Federated Investors. FII has had strong dividend growth in the past few years which of course always seems to peak my interest. As a result, I thought I might have a look at their stock to see if it is worth adding to my Watch List.
The Company: Federated Investors (FII-N)
Federated Investors, Inc. is a provider of investment management and related financial services. Federated sponsors, markets and provides investment advisory, distribution and administrative services primarily to mutual funds. These funds are offered through banks, broker/dealers and other financial intermediaries who use them to meet the needs of their customers; these customers include retail investors, corporations, and retirement plans.
| No | |
| Yes |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My Revenue Score | 0.5 out of 1.0 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My EPS Score | 0.5 out of 1.0 |
TOTAL FUNDAMENTALS SCORE: 1.0 out of 2.0
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 1.0 out of 1.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | Less Than 0.50 | 0.07 | 1.0 |
| Payout Ratio | Less Than 60% | 39% | 1.0 |
| Credit Rating | BBB+ | AA- | 1.0 |
| Total Ratio Score | 3.0 out of 3.0 |
TOTAL RATIOS SCORE: 4.0 out of 4.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Growth Years
| Criteria | Scoring |
| 10+ Years of Dividend Growth | 1.0 |
| Less Than 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Years Score | 1.0 out of 1.0 |
Dividend Growth Rate
Click to Enlarge| Criteria | Scoring |
| 3 Year Div Growth Greater Than or Equal 12% | 1.0 |
| Current Year Div Growth Less Than Previous Year | 0.0 |
| My Dividend Growth Rate Score | 1.0 out of 1.0 |
TOTAL DIVIDEND GROWTH SCORE: 2.0 out of 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld Greater Than 10 Yr Avg Yld | 1.2% | 1.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld Greater Than SPY Yld | 3.0% | 1.0 |
| P/E Ratio | Cur P/E Less Than 10 Yr Avg P/E | 16.9 | 1.0 |
| Relative P/E | Relative P/E Less Than 1.0 | 0.79 | 1.0 |
| Price to Sales | Less Than 1.5 | 2.70 | 0.0 |
| Total Ratio Valuation Score | 4.0 out of 5.0 |
Expected Return
| Criteria | Scoring | |
| Expected Return Score Greater Than 10% | – | 1.0 |
| Expected Return Score Less Than 10% | – | 0.0 |
| My Expected Return Score | 17.4% | 1.0 out of 1.0 |
TOTAL STOCK VALUATION SCORE: 5.0 out of 6.0
TARGET PRICE
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=2.0, Other=0.0) |
| 2.0 |
TOTAL TARGET PRICE SCORE: 2.0 out of 2.0
SUMMARY
Points Earned:
14 out of 16 – half points are rounded down to be conservative
The stock is rated HIGH with 14 points earned through my analysis of the stock. Dividend growth has been strong in the past 10 years, even though the growth rate dipped slightly in the most recent year. However, these are the trends dividend investors like to see. I was very encouraged by this stock – it has strong fundamental data and seems to be priced well. The price-to-sales ratio is high and I will be monitoring that to find out why it is that way. However, this is a stock I am going to add to my watch list. If performance continues as it has been I can see this stock hitting that Dividend Aristocrat list (25+ years of dividend growth).
| Rating | Points Required |
| High | 14+ points |
| Medium | 10-13 points |
| Low | Less Than 10 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy does not own shares in UPS
Dividend Guy,
I am interested in analyzing certain Canadian Dividend achievers. I was wondering if you had a reliable online data source where I could get financial information ( balance sheets, income statements, historical stock and dividend information for at least the previous ten years).
Thanks!
Dividend Growth Investor