Domtar Corporation is the largest integrated producer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade pulp. The firm designs, manufactures, markets and distributes a wide range of business, commercial printing, publication as well as technical and specialty papers with recognized brands such as Cougar, Lynx Opaque Ultra, Husky Opaque Offset, First Choice, Sandpiper (premium 100% recycled unbleached), and Domtar EarthChoice Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of paper distribution facilities.
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Domtar Corporation designs, manufactures, markets, and distributes communications papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates in two segments, Pulp and Paper, and Personal Care. The company provides business papers, including copy and electronic imaging papers that are used with ink jet and laser printers, photocopiers, and plain-paper fax machines, as well as computer papers, preprinted forms, and digital papers for office and home use. It also offers commercial printing and publishing papers comprising offset papers and opaques used in sheet and roll fed offset presses; publishing papers, such as tradebook and lightweight uncoated papers for publishing textbooks, dictionaries, catalogs, magazines, hard cover novels, and financial documents; design papers for brochures and annual reports; and base papers that are converted into envelopes, tablets, business forms, and data processing/computer forms. In addition, the company provides papers for thermal printing, flexible packaging, food packaging, medical gowns and drapes, sandpapers backing, carbonless printing, labels, and other coating and laminating applications; and papers for industrial and specialty applications, such as carrier papers, treated papers, security papers, and specialized printing and converting applications. Further, it designs, manufactures, markets, and distributes adult incontinence products and absorbent hygiene products under the brand name of Attends, IncoPack, and Indasec. It provides branded and private label briefs, protective underwear, underpads, pads, and washcloths, as well as baby diapers and infant training pants for acute care, long-term care, homecare, and retail channels. The company serves merchants, retail outlets, stationers, printers, publishers, converters, and end-users. Domtar Corporation is headquartered in Montreal, Canada.
(Summary) (Company) (Chart)
| 8 February 2016 Price $31.03 1yr Target $43.04 Analysts 13 Dividend $1.60 Payout Ratio 71.42% 1yr Cap Gain 38.70% Yield 5.15% 1yr Tot Return 43.85% | EPS (ttm) $2.24 EPS next yr $2.98 EPS next 5yr 3.00% 1yr Price Support $8.94 P/E 13.85 PEG 4.62 Beta 1.49 Market Cap $1.97 Bil Revenues $5.26 Bil Earnings $142.00 Mil Profit Margin 2.69% | 1yr EarnGR 388.23% 3yr EarnGR 13.36% 5yr EarnGR 25.18% 1yr DivGR 33.33% 3yr DivGR 28.81% 5yr DivGR --- Quick Ratio 1.00 Current Ratio 2.00 Debt/Equity 0.48 ROA 2.40% ROE 5.30% |
My Perspective
This is another great company paying a great growing dividend, but it's also rather expensive. And the reason it's expensive is because Dividend Growth Investors are too often willing to push up the price of companies that continue to increase their dividend year after year. DGIs are often more interested in securing a stream of dividend income than preserving the value of their portfolio. They tend to over pay for the stocks there interested in and this seems to be the case with Domtar today. I believe it's priced higher than it should be.
If the five year earnings growth rate really ends up being three percent as estimated by the analysts, then I just don't see how this company can continue to raise it's dividend above the rate of inflation. The money's just not coming in fast enough to do that. Especially since the payout ratio is already above 71%. I think if the company is able to increase the dividend at all, the high payout ratio will limit those future increases.
I Like the one year estimated return on invested capital and the current yield, but unless this company can find a way to increase its earnings growth rate I just don't see how they can increase their stock price or their dividend for long. I'll continue to monitor this company but it's currently not on my buy list.
If the five year earnings growth rate really ends up being three percent as estimated by the analysts, then I just don't see how this company can continue to raise it's dividend above the rate of inflation. The money's just not coming in fast enough to do that. Especially since the payout ratio is already above 71%. I think if the company is able to increase the dividend at all, the high payout ratio will limit those future increases.
I Like the one year estimated return on invested capital and the current yield, but unless this company can find a way to increase its earnings growth rate I just don't see how they can increase their stock price or their dividend for long. I'll continue to monitor this company but it's currently not on my buy list.
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