Sunday, 31 March 2013

A Look at JPMorgan Chase


JPM intends on increasing its dividend to $1.52, and I intend on adding more shares if it drops to the low to mid 40’s. This would give me an initial yield of about 3.5% on my new shares.

Average Dividend Yield Analysis*

The analysis below is based on the intended dividend of $1.52.

JPM-N
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2002
$39.68
$15.26
$0.340
$0.340
$0.340
$0.340
$1.36
8.91%
3.43%
2003
$38.26
$20.13
$0.340
$0.340
$0.340
$0.340
$1.36
6.76%
3.55%
2004
$43.84
$34.62
$0.340
$0.340
$0.340
$0.340
$1.36
3.93%
3.10%
2005
$40.56
$32.92
$0.340
$0.340
$0.340
$0.340
$1.36
4.13%
3.35%
2006
$49.00
$37.88
$0.340
$0.340
$0.340
$0.340
$1.36
3.59%
2.78%
2007
$53.25
$40.15
$0.340
$0.340
$0.380
$0.380
$1.44
3.59%
2.70%
2008
$50.63
$19.69
$0.380
$0.380
$0.380
$0.380
$1.52
7.72%
3.00%
2009
$47.47
$14.96
$0.380
$0.050
$0.050
$0.050
$0.53
3.54%
1.12%
2010
$48.20
$35.16
$0.050
$0.050
$0.050
$0.050
$0.20
0.57%
0.41%
2011
$48.36
$27.85
$0.050
$0.250
$0.250
$0.250
$0.80
2.87%
1.65%
2012
$46.49
$30.83
$0.250
$0.300
$0.300
$0.300
$1.15
3.73%
2.47%
2013


$0.300
$0.300
$0.380
$0.380
$1.36


2014


$0.380
$0.380
$0.380
$0.380
$1.52


Stock prices are per calendar year.
11y ave
4.49%
2.51%
Dividends are recorded in the quarter they were paid.
5y ave
3.69%
1.73%







3y ave
2.39%
1.51%







5y
$41.23
$78.51







3y
$63.59
$89.81






Super Cheap
$19.69


A massive dividend cut in 2009 followed by a massive dividend increase in 2011 skews the Average Dividend Yield Analysis, but for what it’s worth, here it is:

The table shows the 3 year average dividend yield to be 2.39% ((0.57% + 2.87% + 3.73%)/3). I use the numbers in the “High Yield” column for obvious reasons.

Using the current annual dividend of $1.52, one would have to pay $63.59 for a 2.39% dividend yield.

Buying the stock at its low in 2008 would have earned you an initial yield of 7.72%. Using the current annual dividend, that corresponds to a stock price of $19.62 today (see “super cheap” price in the table above).

Graham Price

JPM’s 2010, 2011 and 2012 EPS were $3.96, $4.48 and $5.20. 3Y Ave EPS = $4.55.
JMP’s BV is $51.27.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $72.42

Cyclically Adjusted Price to Earnings Ratio

JPM’s 10Y Ave EPS = $3.21
CAPE = Stock Price / 10Y Ave EPS = $51.90 / $2.01 = 14.8
A CAPE below 20 is good.

Conclusion

JMP is attractively valued based on Graham Price and CAPE. Moreover, JPM increased EPS from $0.80 in 2002 to $5.20 in 2012. That’s an increase of 6.5 times over 10 years. 2013 and 2014 EPS are estimated at $5.40 and $5.60, respectively.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.

  

Thursday, 28 March 2013

New Purchase - Bank of Nova Scotia


Over the years, I’ve traded in and out of Bank of Nova Scotia, better known as Scotiabank (BNS-T). A couple days ago, I purchased 125 shares of BNS-T @ $59.75 a share ($59.67 + $9.95 commission). I have yet to decided if this is a short or long position. I will evaluate based on market conditions; I fear a real-estate bubble in Canada, which will certainly impact bank profits if and when it hits.

This is by far my favorite Canadian bank because of its international exposure; Anguilla, Antigua, Bahamas, Barbados, Belize, Brazil, British Virgin Islands, Cayman Islands, Chile, China, Columbia, Costa Rica, Curacao, Dominican Republic, El Salvador, Ireland, England, Jamaica, Malaysia, Mexico, Peru, Puerto Rico, Trinidad, Turks and Caicos, Uruguay and USA – I think I got them all.

I don’t have an analysis of this stock because I rely on Tom Connolly’s (dividendgrowth.ca).

With this new purchase, my forward 12-month dividends stand at $4,117.98.