Option Assignment – The Jean Coutu Group

Another position exits my portfolio. Earlier in the month, I had written a covered call option on The Jean Coutu Group (PJC.A.TO). The option expired on Friday Jul 15, 2016 with the stock ending up in-the-money, which resulted in the stock getting called away. I owned PJC.A.TO for approximately two and a half years and the company has traded sideways during the duration, although it reached a high of mid-$20s about a year ago.

I still believe in the long term growth of PJC and sad to see this stock get called away, but its a risk you take with options trading. Making a decent profit and staying in cash during these volatile times isn’t so bad I suppose…so I’m not complaining.

Overall gains (including dividends and option premiums): 17.88%

Recent Dividend Increases

DivGrowthInfo The birth of our baby girl has kept me busy over the past few weeks. As such, I missed capturing the dividend increase announcements. Instead of posting each increase separately, I will capture the increase announcements in a single post here – for the sake of easier documentation.

On April 26, 2016 Wells Fargo & Co (WFC) announced a 1.33% dividend raise. The quarterly dividend increases from $0.375 to $0.38. The new dividend amount is payable Jun 1, 2016 to shareholders on record on May 6, 2016.

On April 26, 2016 Apple Inc (AAPL) announced a 9.62% dividend raise. The quarterly dividend increases from $0.52 to $0.57. The new dividend amount is payable May 12, 2016 to shareholders on record on May 9, 2016.

On April 27, 2016 The Jean Coutu Group (PJC.A.TO) announced a 9.09% dividend raise. The quarterly dividend increases from C$0.11 to C$0.12. The new dividend is payable May 27, 2016 to shareholders on record on May 13, 2016.

On April 28, 2016 Johnson & Johnson (JNJ) announced a 6.67% dividend raise. The quarterly dividend increases from $0.75 to $0.80. The new dividend amount is payable Jun 7, 2016 to shareholders on record on May 24, 2016.

On May 3, 2016 Cineplex Inc (CGX.TO) announced a 3.85% dividend raise. The monthly dividend increases from C$0.13 to C$0.135. The new dividend is effective May and will be paid in June 2016.

On May 12, 2016 Algonquin Power & Utilities Corp (AQN.TO) announced a 9.97% dividend raise. The quarterly dividend increases from US$0.0963 to C$0.1059. The new dividend is payable Jul 15, 2016 to shareholders on record on Jun 30, 2016.

On May 13, 2016 Power Corporation of Canada (POW.TO) announced a 7.63% dividend raise. The quarterly dividend increases from C$0.31125 to C$0.3350. The new dividend is payable Jun 30, 2016 to shareholders on record on Jun 9, 2016.

Be sure to check out Dividend Growth Info for regular weekly updates and follow DivGrowthInfo on Twitter for all dividend growth increase announcements.

Full Disclosure: Long all stocks mentioned above.

Jean Coutu Group (PJC.A.TO) Dividend Increase

The Jean Coutu Group (PJC.A.TO) announced 10% increase in its cash dividend. The quarterly cash dividend will increase from $0.10 to $0.11 per share and payable on May 29, 2015, to shareholders on record as of May 15, 2015. The annual dividend amount increases from $0.40 to $0.44. Yield going forward is 1.78%.

From the Q4 earnings report:

  • Revenues increased by 4.2% to $713.9 million in the fourth quarter of fiscal year 2015 compared with the same quarter of last year.
  • Net profit per share remained stable at $0.30 during the fourth quarter of fiscal year 2015 compared with the same quarter of last year.
  • The quarterly dividend increased by 10% to $0.11 per share.
  • The Toronto Stock Exchange accepted the Corporation’s notice of intention to purchase up to 7,983,000 of the Corporation’s outstanding class “A” subordinate voting shares in the 12-month period ending May 6, 2016.

My portfolio consists of 100 shares of PJC.A.TO, which increases my annual dividends from $40 to $44, an increase of $4.

The Jean Coutu Group (PJC.A.TO) Dividend Increase

Another pay-raise! The Jean Coutu Group (PJC.A.TO) announced that it will be raising its quarterly dividend by 17.6% from 8.5 cents per share to 10 cents per share. This dividend increase is the company’s 6th consecutive annual increase. The new dividend is scheduled to be paid on May 30, 2014 to shareholders on record as of May 16, 2014. The new dividend rate results in an annualized yield of 1.81% based on PJC.A’s current stock price.

 

My portfolio consists of 100 shares of PJC.A, which increases my annual dividend raise from $34 to $40. My yield-on-cost rises to 2.17%.

Recent Buy – The Jean Coutu Group (PJC.A)

I initiated a new position in The Jean Coutu Group (PJC) Inc. (PJC.A). For folks unfamiliar with PJC, it is the Walgreens and Shoppers Drug Mart of Québec. PJC engages in franchised drugstores mostly in the province of Québec, with a few more stores in New Brunswick and Ontario. The stock has a 5-yr dividend growth rate (DGR) of 15.31%.

Corporate Profile

The Jean Coutu Group (PJC) Inc. engages in the retail of pharmaceutical, parapharmaceutical, and other products in Canada. The company operates franchised drugstores under the PJC Jean Coutu, PJC Clinique, PJC Jean Coutu Santé, and PJC Jean Coutu Santé Beauté names. PJC operates a network of 411 franchised stores in the provinces of Québec, New Brunswick, and Ontario. The company also operates two distribution centers and provides services to franchised stores. In addition, the company, through its subsidiary, Pro Doc Ltd, engages in the manufacture and sale of generic drugs to wholesalers and pharmacists. Further, it leases and rents lands and buildings. The Jean Coutu Group (PJC) Inc. was founded in 1969 and is headquartered in Longueuil, Canada.

Recent Buy Decision

I have had my eye on Walgreen Co (WAG) for a while, but didnt pull the trigger when the stock was priced around $48 a few months ago, which at the time I thought was a fair price. I feel that currently at $60, WAG is fairly-to-overpriced and is not the right time to initiate a new position in it. This led me to look deeper into other drugstores and The Jean Coutu Group stood out.
PJC provides tremendous value for the investment at current levels. The company has almost no debt, its book value has grown impressively over the years. In the last 12 months, the book value has grown by 169% and the stock price has risen by 21%, so there is still plenty of upside left. In addition, PJC is rewarding its shareholders with $502M by retiring 22 million shares via a share buyback program and distributing a one-time dividend of $0.50 (about 2.7% based on today’s price) on  Dec 2, 2013 for shareholders on record on Nov 25, 2013. This is yet another stock that fits into my plan of building my own healthcare fund.
A summary of the stock:
  • Symbol: TSE: PJC.A
  • Quote: $18.41
  • 52-week Range: $14.13 – $19.60
  • P/E: 9.53
  • P/B: 2.98
  • Debt/Equity: 0.02
  • Yield: 1.95%
  • 5-yr Avg Yield: 1.9%
  • 5-yr DGR:  15.31%
  • Payout: 17.62%
  • Book Value per Share: 6.17
  • Graham Number: 16.37
For my full list of holdings, click here