Monday, July 29, 2013

Recent Buy: TGH

 TGH Investor Relations
Jul 29, 2013: Bought 75 shares of TGH at $33.97 per share.

Textainer Group Holdings Ltd. (TGH) leases containers to approximately 400 shipping lines and other worldwide customers.

On Friday I completed a stock analysis of TGH when it was trading at $34.11 per share. I like TGH for its generous yield and impressive earnings and dividend growth history. Also, TGH is my first stock in the services sector, so it increases DivGro's diversification. 

Analysis Update


At my purchase price of $33.97, TGH's annual dividend of $1.84 yields 5.42%. TGH has a 5-year dividend growth rate of 52.14% and a streak of 7 years of dividend increases. The purchase price is discounted by about 12% to the Graham Number estimate of $39.76.

TGH passes the following of my selection criteria:
  • Chowder Dividend Rule: Sum of dividend yield (5.42%) and 5-yr dividend CAGR (52.14%) is 57.55% (easily exceeds 12%)
  • Dividend payout ratio is 48.17% (below 65%)
  • 7-year weighted average dividend growth rate is 51.92% (at least 7%)
  • Price to earnings ratio is 10.06 (less than 16)
  • 5-yr total payback percentage is 26.89% (at least 16%)

TGH fails this criterium:
  • Debt to equity ratio is 230% (not below 50%). As mentioned on Friday, TGH is borrowing money to expand its business, turning low-cost debt into growing earnings. 

TGH earns 6 out of 7 stars: (*******)

The following table summarizes key statistics for TGH:

Final Remarks


75 shares of TGH adds $138 of expected annual dividend income. The forward 12-month projected dividend income is $1,386.52For the 2013 calendar year, this purchase adds $69 of expected dividend income, for a total of $1099.87 for 2013.

I now own shares in 12 different companies in DivGro.

Full Disclosure: Long TGH

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