CINF earned one Star in this section for 3.) above. It has paid a cash dividend to shareholders every year since 1954 and has increased its quarterly cash dividend payments for 48 consecutive years. CINF earned two Stars in this section. The NPV MMA Diff of $14,964 is well above the level I look for. With a current yield of 5.98%, CINF exceeds the 4.61% long-term average MMA rate. Other: CINF is a member of the S&P 500, is an Achiever and an Aristocrat. S&P believes the company is a conservative underwriter with sound risk and capital management policies. CINF has improved its underwriting, investment results and profitability in recent years. However, CINF will face price competition in its core markets. CINF also has among the lowest rates of return on equity in its peer group. If industry consolidation activity increases, CINF could be viewed as a takeover candidate.Linked here is a PDF copy of my analysis of Cincinnati Financial Corp (CINF) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: This insurance holding company markets primarily property and casualty coverage; it also conducts life insurance and asset management operations.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
CINF is trading at a discount to all the above. If I exclude the high and low valuation, and average the remaining two valuations, CINF is trading at a 50.9% discount. A Star is added since CINF is trading at a fair value.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
Conclusion: CINF earned a Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned two Stars in the Dividend Income vs. MMA section for a net total of 4 Stars. This rates CINF as a 4 Star-Buy.
Using my [D4L-PreScreen.xls] model I determined the dividend growth rate could approach zero and CINF would still generate a NPV of MMA Differential close to the $3,000 that I look for from a company that is both an Achiever and an Aristocrat. Given the recent melt-down in the financial sector, most financials that have not cut their dividend are quantitatively grading out as Buy or Strong-Buy. Though interesting, CINF hasn't shown me enough to initiate a position in it.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I do not own shares of CINF (0.0% of my Income Portfolio).
What are your thoughts on CINF?
Recent Stock Analyses:
Stock Analysis: Cincinnati Financial Corp (CINF)
Posted by D4L | Monday, June 30, 2008 | analysis | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
GameStop (NYSE:GME) lost about 40% of its market value over the past three years, as rising digital downloads and declining mall traffic thr...
-
In a capitalistic society, opportunities to generate (mostly) passive income are all around us. Dividend growth investing is one of the most...
-
These elite income producers have rallied this year. Their brilliance at producing passive income seems to have caught the market's eye ...
-
Since the market highs in July, stocks have been under considerable pressure. Indeed, 10-year Treasury yields are at the highest level since...
-
Buying dividend stocks can be tricky. Oftentimes, stocks that pay exorbitantly high dividends have underlying financial problems, and their ...
-
While optimism in the broader market remains robust – particularly for hyped-up sectors like technology – investors may still want to consid...
-
If you are looking for reliable dividends, these three Dividend Kings should be right up your alley. Dividends are paid at the discretion of...
-
A strong dividend investing strategy may be to focus on high-quality names that score well on several dividend-related metrics. In other wor...
-
Despite all that work, its valuation remains dirt cheap. That's a big reason why its distribution currently yields more than 9% despite ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.