Magna International - Undervalued Dividend Powerhouse


  • Magna is drastically undervalued with 26% upside.
  • Superior dividend growth with 27% dividend CAGR over the past six years.
  • Presents a unique US tax arbitrage opportunity for Canadian investors.


Magna International Inc. ("Magna") (NYSE:MGA), a major manufacturer of vehicle-related products, is currently undervalued relative to its fundamentals when measured against EPS and book value. Since 2010, it has demonstrated itself to be a strong dividend player with a positive outlook and plenty of room to increase dividends into the future. At its current market price (U$44.41 and C$58.13 as of market close on February 10, 2017), it is a bargain.


Magna is a major automotive parts manufacturer that generates revenue from eight key categories:

  • Body systems and chassis systems
  • Exterior systems
  • Powertrain systems
  • Seating systems
  • Tooling, engineering and other
  • Vision and electronic systems
  • Complete vehicle assembly
  • Closure systems

As a true international conglomerate, it reports revenues in four key geographic segments:

  • North America
  • Europe
  • Asia (as of 2012)
  • "Rest of World"

With over 350 facilities spread amongst 29 countries, the company has generated over $30 billion in revenue in each of the past four years (2012-2015) and increased its EPS every year since 2010. Over the course of the past decade, the company has paid a dividend each year, consistently increasing the dividend since 2009. Moreover, during that same period, Magna has had only a single fiscal period of negative EPS (in 2009, following the financial crisis).

Magna's mission is to "[d]evelop and supply mechanically and electronically controlled powertrain and electronic systems and components that improve fuel economy, minimize pollution, and enhance safety and performance," and it is accomplishing this mission through a four-pronged strategy focused on:

  • Lightweight material and science to drive performance and quality through innovative mass reduction;
  • Becoming smarter through comfort, convenience, and connectivity, designing and delivering an inspired, best-in-class cabin experience;
  • Becoming safer through active and passive safety, engineering protection and peace of mind for all who share the road; and

This article was written by

Patrick is an individual investor who has been investing based on his own recommendations for the past 10 years, with a focus on dividend growth investing, and small-medium cap companies primarily based in Canada. Currently employed in the Retirement Services and Insurance industry, he has over 12 years of experience in the Financial and Pension sector in the middle and back office environments. He runs the investment blog Dividend Gangster, and has a mission of providing financial advice and company recommendations for casual/individual investors, with a focus on long term capital gains and passive income growth. He has in MBA with a focus on Finance and Strategy, and is also an instructor for the Canadian Securities Course.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MGA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (16)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.