I own this stock of SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Between 2009 and now it was taken from the list and added back to this list.
When I was updating my spreadsheet, I noticed that the stock price seemed to stall in 2015. Then it was $30.15. The stock fell in 2020 by 26% for covid and has recovered to $30.65
The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.04%. The 5, 10 and historical dividend yields are also good at 5.50%, 5.60% and 5.88%. The dividends have been increasing by 2.8% per year over the past 5 years. However, the last dividend increase was in 2019 and it was for 2.8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 425% with 5 year coverage at 97%. Because this is a REIT, we need to look at the DPR for Funds from Operations (FFO), which is more important than the one for EPS. The DPR for FFO for 2020 is 87% with 5 year coverage at 80%. The DPR for Adjusted Funds from Operations (AFFO) is 87% with 5 year coverage at 83%. The DPR for FFO and AFFO are fine between 75% and 95%. The DPR for FCF for 2020 is 88% with 5 year coverage at 59%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is too high at 1.11, but is better currently at 0.81. This movement lower has to do mostly with the stock price recovery. The stock took a dive for covid and this is not unusual. The Liquidity Ratio for 2020 is 0.92. If you take into account Cash Flow less Dividends Paid in Cash and the current portion of the Long Term Debt the ratio becomes 4.32. The Debt Ratio is 1.93. The Leverage and Debt/Equity Ratios for 2020 are 2.08 and 1.08.
The Total Return per year is shown below for years of 5 to 23 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 2.83% | 1.22% | -5.23% | 6.45% |
| 2010 | 10 | 1.80% | 6.93% | -0.12% | 7.05% |
| 2005 | 15 | 2.02% | 6.58% | -0.19% | 6.77% |
| 2000 | 20 | 2.83% | 14.19% | 4.90% | 9.29% |
| 1997 | 23 | 26.95% | 12.05% | 14.90% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.65, 14.63 and 15.61. The corresponding 10 year ratios are 12.92, 13.98 and 15.29. The corresponding historical ratios are 14.54, 16.89 and 20.96. The current P/E Ratio is 16.30 based on a stock price of $30.65 and EPS estimate for 2021 of $1.88. The current is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
Because this is a REIT, we need also look at the Price/Funds from Operations Ratios. The 5 year low, median, and high median P/FFO Ratios are 13.01, 14.37 and 15.51. The corresponding 10 year ratios are 13.12, 14.51 and 15.77. The current P/FFO Ratio is 14.46 based on a stock price of $30.65 and FFO for 2021 of 2.12. The current ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Because this is a REIT, we need also look at the Price/Adjusted Funds from Operations Ratios. The 5 year low, median, and high median P/AFFO Ratios are 13.88, 15.13 and 16.33. The corresponding 10 year ratios are 13.88, 15.19 and 16.46. The current P/AFFO Ratio is 17.12 based on a stock price of $30.65 and AFFO for 2021 of 1.79. The current is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $34.80. The 10 year low, median, and high median Price/Graham Price Ratios are 0.82, 0.86 and 0.96. The current P/GP Ratio is 0.88 based on a stock price of $30.65. The current ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median
I get a 10 year median Price/Book Value per Share Ratio of 1.23. The current P/B Ratio is 1.21 based on a stock price of $30.65, Book Value of $4,316M and Book Value per Share of $25.39. The current ratio is 2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 15.58. The current P/CF Ratio is 16.69 based on Cash Flow for the last 12 months of $312M, Cash Flow per Share of $1.84 and a stock price of $30.65. The current P/CF Ratio is 7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 5.88%. The current dividend yield is 6.04% based on dividends of $1.85 and a stock price of $30.65. The current dividend yield is 2.7% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.60%. The current dividend yield is 6.04% based on dividends of $1.85 and a stock price of $30.65. The current dividend yield is 7.8% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 6.57. The current P/S Ratio is 6.62 based on a stock price of $30.65, Revenue estimate for 2021 of $787M, and Revenue per Share of $4.63. The current ratio is 0.8% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and at the median.
Results of stock price testing is that the stock price is probably reasonable and at or below the median. The P/S Ratio testing shows the stock price at the median and the dividend yield tests show it below the median. The various tests show different results, but ones that show the stock price as expensive, do not show the stock that far into the expensive range.
Is it a good company at a reasonable price? The stock price would seem reasonable. Because this is a REIT, you would expect to earn your return mostly from dividends. There seems to be vastly different views by analysts of this company. I made a small purchase using my TFSA money, which is my fooling around money.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $31.63. This implies a total return of 9.23% with 3.20% from Capital gains and 6.04% from dividends.
Analysts on Stock Chase like the company, but they disagree if it is buy or not. Joey Frenette on Motley Fool says this is a great passive investment stock to buy now. The Executive Summary on Simply Wall Street list 3 risks. The company put out a press release on Global Newswire about their second quarter of 2021. Canada Stock Channel via Nasdaq Site names this stock as a Top 25 Dividend Stock.
SmartCentres Real Estate Investment Trust is a Canadian open-ended mutual fund trust. The company principally generates revenue from property leasing operations. Smart REIT comprises two groups of properties: retail and mixed-use. Its web site is here SmartCentres REIT.
The last stock I wrote about was about was High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more. The next stock I will write about will be Just Energy Group Inc (TSX-JE, NYSE-JE) ... learn more on Friday, September 3, 2021 around 5 pm. Tomorrow on my other blog I will write about Canadian REITs.... learn more on Thursday, September 2, 2021 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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