Is it a good company at a reasonable price? This is a real estate company. A lot of real estate companies have had problems lately, especially those with office buildings. REITs tend to have good dividend yields and little in the way of capital gain growth. I bought some REITs for diversification purposes. If you like this REIT, now is probably a good time to buy. The current stock price seems to be cheap.
I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.
When I was updating my spreadsheet, I noticed that all the Executive and Directors seems to have decreased their shares in the company by about 6% in the past year according to INK. Yest INK does not show any sales over the past year. That is curious.
If you had invested in this company in December 2014, for $1021.31 you would have bought 47 shares at $21.73 per share. In December 2024, after 10 years you would have received $677.05 in dividends. The stock would be worth $436.16. Your total return would have been $1,113.21. This would be a total return of 1.21% per year with 8.16% from capital loss and 9.37% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.73 | $1,021.31 | 47 | 10 | $677.05 | $436.16 | $1,113.21 |
The current dividend yield is Good with dividend growth maybe restarting. The current dividend yield is good (5% to 6% ranges) at 6.04%. The 5, 10 and historical dividend yields are also good at 5.48%, 6.09% and 6.23%. There was dividend growth has in 2023, but only one increase. Analysts do not expect any dividend changes in the near future. The dividend increase in 2023 was for 9.2%.
The Dividend Payout Ratios (DPR) are improving into a reasonable value. The DPR for 2024 for Earnings per Share (EPS) is non-calculable due to earning losses with 5 year coverage far too high at 290%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is good at 63% with 5 year coverage too high at 137%. The DPR for 2024 for Funds from Operations (FFO) is good at 50% with 5 year coverage too high at110%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 37% with 5 year coverage too high at 78%. The DPR for 2024 for Free Cash Flow (FCF) is too high at 79% with 5 year coverage at 67%. There is no agreement on FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -140.30% | 289.94% |
| AFFO | 62.89% | 136.76% |
| FFO | 50.21% | 109.91% |
| CFPS | 37.06% | 77.59% |
| FCF | 79.10% | 68.61% |
Debt Ratios are fine, but the company does have lots of debt. The Long Term Debt/Market Cap Ratio for 2024 is too high at 1.45 and currently at 1.36. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.39 and currently at 0.39 because this is a more important one for a REIT. The Liquidity Ratio for 2024 is far too low at 0.78 and 0.78 currently. If you added in Cash Flow after dividends, the ratios are still too low at 1.22 and currently at 1.22. The Debt Ratio for 2024 is good at 1.99 and 1.99 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 2.01 and 1.01 and currently at 2.01 and 1.01.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.45 | 1.36 |
| Lg Term R, A | 0.39 | 0.39 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.78 | 0.78 |
| Liq. + CF | 1.22 | 1.22 |
| Debt Ratio | 1.99 | 1.99 |
| Leverage | 2.01 | 2.01 |
| D/E Ratio | 1.01 | 1.01 |
The Total Return per year is shown below for years of 5 to 27 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | -12.80% | -5.52% | -15.15% | 9.63% |
| 2014 | 10 | -6.41% | 1.21% | -8.16% | 9.37% |
| 2009 | 15 | -0.23% | 6.76% | -3.34% | 10.10% |
| 2004 | 20 | -2.86% | 5.25% | -3.52% | 8.77% |
| 1999 | 25 | -1.83% | 11.67% | -0.45% | 12.13% |
| 1996 | 27 | 0.09% | 11.32% | -0.27% | 11.59% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.54, 4.24 and 4.94. The corresponding 10 year ratios are 13.33, 14.83 and 16.33. The corresponding historical ratios are 12.92, 1313 and 18.91. The current ratio is 8.50 based on a stock price of $9.94 and EPS estimate for 2025 of $1.17. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. (Note that the 5 year ratios are low because of a year with an earnings loss.)
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 9.07, 11.53 and 13.14. The corresponding 10 year ratios are 11.11, 13.04, 15.32. The current ratio is 9.75 based on a stock price of $9.94 and AFFO estimate for 2025 of $1.02. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 7.24, 8.81 and 10.42. The corresponding 10 year ratios are 9.10, 10.68 and 12.33. The current ratio is 8.42 based on a stock price of $9.94 and FFO estimate for 2025 of $1.18. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $23.03. The 10-year low, median, and high median Price/Graham Price Ratios are 0.69, 0.76 and 0.88. The current P/GP Ratio is 0.43 based on a stock price of $9.94. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 0.82. The current P/B Ratio is 0.49 based on a Book Value of $5,279M, Book Value per Share of $20.15 and a stock price of $9.94. The current ratio is 40% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 11.18. The current ratio is 9.50 based on last 12 months Cash Flow of $275M, Cash Flow per Share of $1.05 and a stock price of $9.94. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 6.23%. The current dividend yield is 6.04% based on a stock price of $9.94 and dividends of $0.60. The current dividend yield is 3% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. The problem with this test is big decrease in distributions after 2019.
I get a 10 year median dividend yield of 6.09%. The current dividend yield is 6.04% based on a stock price of $9.94 and dividends of $0.60. The current dividend yield is 0.8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. The problem with this test is big decrease in distributions after 2019.
The 10-year median Price/Sales (Revenue) Ratio is 4.18. The current P/S Ratio is 2.78 based on a Revenue estimate for 2025 of $936M, Revenue per Share of $3.57 and a stock price of $9.94. The current ratio is 33% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield testing is showing the stock price as Reasonable, but above the median, but dividends have recently been cut. The P/S Ratio test is showing the stock price as relatively cheap. The rest of the testing is showing the stock price as relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1) and Hold (4). The consensus would be a Buy. The 12 month stock price is 11.39 with a high of 12.00 and low of $10.75. The consensus stock price of $11.39 implies a total return of 20.62% with 14.59% from capital gains and 6.04% from dividends based on a current stock price of $9.94
The only entry for 2025 on Stock Chase is a hold. Analyst said to expect better times for the company ahead. Stock Chase gives this stock 5 stars out of 5. Amy Legate-Wolfe on Motley Fool says investing in dividend stocks while they are down is a smart move. Joey Frenette on Motley Fool says to buy this stock with a high yield of over 6%. The company put out a press release on Newswire about their fourth quarter results for 2024.
Simply Wall Street via Yahoo Finance says H&R has beaten analysts expectation for year 2024. Simply Wall Street via Yahoo Finance says this company is undervalued and worth $15.91 CDN$. (Third company for SWS to look at.) Simply Wall Street has 2 warnings of interest payments are not well covered by earnings; and unstable dividend track record. Simply Wall Street gives this stock one and one half stars out of 5.
H&R Real Estate Investment Trust is a real estate investment trust principally involved in the ownership of properties in Canada and the U.S. The REIT has four reportable operating segments- Residential, Industrial, Office and Retail, in two geographical locations -Canada and the United States. Its web site is here H & R Real Estate Trust.
The last stock I wrote about was about was Bombardier Inc (TSX-BBD.B, OTC-BDRBF) ... learn more. The next stock I will write about will be Enbridge Inc (TSX-ENB, NYSE-ENB) ... learn more on Friday, March 14, 2025 around 5 pm. Tomorrow on my other blog I will write about Canada’s Personal Finance Encyclopedia.... learn more on Thursday, march 13, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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