Is it a good company at a reasonable price? With REITs, you tend to get a good yield but low growth in both capital gains and dividends. There is always a trade off between dividend yield and growth. I bought this stock for diversification. I actually bought this in my TFSA, which is generally my fooling around money. I plan to keep this stock. All my testing is saying that the stock price is relatively reasonable.
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. It is not always on this list because of periods of flat dividends.
When I was updating my spreadsheet, I noticed I have made a total return of 9.61% per year with 2.35% from capital gains and 7.26% on dividends on this stock which I initially bought in 2021 and 2022. REITs tend to be good dividend producers. This stock is not doing as well now as it did in the past. It is plain to see as the dividends have been flat since 2020. Dividends have been flat before.
I also noticed that Mitchell Goldhar, the founder of the company, between last year and this year, has been granted just under 10M more options. This seems like a lot to me.
If you had invested in this company in December 2014, for $1,010.10 you would have bought 37 shares at $27.30 per share. In December 2024, after 10 years you would have received $658.32 in dividends. The stock would be worth $905.02. Your total return would have been $1,563.34. This would be a total return of 5.67% per year with 1.09% from capital loss and 6.76% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $27.30 | $1,010.10 | 37 | 10 | $658.32 | $905.02 | $1,563.34 |
The current dividend yield is good with dividend growth very low. The dividend yield is good (5% to 6% ranges) at 6.84%. The 5 year median dividend yield is high (7% and above) at 7.57%. The 10 year and historical median dividend yields are good at 6.12% and 6.17%. The dividend growth is low (below 8%) at just 0.46% per year over the past 5 years. There has been no dividend increases since 2019 when the dividends were increase by 2.78%. REIT tend to have high yields and low increases. There is always a trade off between yields and growth.
The Dividend Payout Ratios (DPR) are probably fine as REIT generally have higher payout rates. The DPR for 2024 for Earnings per Share (EPS) is far too high at 141% with 5 year coverage at 79%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is too high at 93% with 5 year coverage at 93%. The DPR for 2024 for Funds from Operations (FFO) is probably fine at 83% with 5 year coverage at 85%. The DPR for 2024 for Cash Flow per Share (CFPS) is high at 62% with 5 year coverage at 66%. The DPR for 2024 for Free Cash Flow (FCF) is high at 74% with 5 year coverage at 77%. In 2025, FCF varies from $215.3M to $410M. REITs tend to have higher payout ratios.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 141.24% | 79.20% |
| AFFO | 92.97% | 92.73% |
| FFO | 82.96% | 84.82% |
| CFPS | 61.93% | 66.32% |
| FCF | 73.78% | 77.24% |
For Debt Ratios I worry about the Liquidity Ratio but other ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is high at 0.97 and currently at 0.90. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.38 and currently at 0.39 because this is a more important ratio for a REIT. The Liquidity Ratio for 2024 is far too low at 0.11 and 0.29 currently. If you added in Cash Flow after dividends, the ratios are still very low at 0.15 and currently at 0.35. This ratio needs to be 1.50 or above to be a good ratio. If you add back in current portion of the long term debt, the ratio is still low at 0.50 and currently at 1.01. The Debt Ratio for 2024 is good at 2.13 and 2.10 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.88 and 0.88 and currently at 1.91 and 0.91.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.97 | 0.90 |
| Lg Term A | 0.38 | 0.39 |
| Intang/GW | 0.01 | 0.01 |
| Liquidity | 0.11 | 0.29 |
| Liq. + CF | 0.15 | 0.34 |
| Liq CF DT | 0.50 | 1.01 |
| Debt Ratio | 2.13 | 2.10 |
| Leverage | 1.88 | 1.91 |
| D/E Ratio | 0.88 | 0.91 |
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 | 0.46% | 1.75% | -4.76% | 6.51% |
| 2014 | 10 | 1.74% | 5.67% | -1.09% | 6.76% |
| 2009 | 15 | 1.20% | 9.33% | 1.52% | 7.81% |
| 2004 | 20 | 2.11% | 9.04% | 1.34% | 7.70% |
| 1999 | 25 | -1.20% | 11.59% | 3.60% | 7.99% |
| 1997 | 27 | 26.66% | 10.42% | 16.24% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.26, 10.88 and 12.49. The corresponding 10 year ratios are 12.92, 13.98 and 15.29. The corresponding historical ratios are 13.32, 16.43 and 18.76. The current ratio is 13.13 based on a stock price of $27.05 and EPS estimate for 2025 of $2.06. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 9.46, 11.10 and 14.74. The corresponding 10 year ratios are 11.99, 13.54 and 15.24. The corresponding historical ratios are 12.47, 13.70 and 15.42. The current ratio is 13.87 based on a stock price of $27.05 and FFO estimate for 2025 of $1.95. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 10.80, 12.28 and 15.78. The corresponding 10 year ratios are 12.95, 14.63 and 15.06. The corresponding historical ratios are 13.12, 14.84 and 16.33. The current ratio is 12.08 based on a stock price of $27.05 and AFFO estimate for 2025 of $2.24. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $37.58. The 10-year low, median, and high median Price/Graham Price Ratios are 0.79, 0.87 and 0.94. The current ratio is 0.72 based on a stock price of $27.05. The current ratio is between 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 1.06. The current ratio is 0.89 based a stock price of $27.05, Book Value of $5,190M and Book Value per Share of $30.46. The current ratio is 16% 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 13.71. The current ratio is 11.92 based on Cash Flow for the past 12 months of $386.7M, Cash Flow per share of $2.27 and a stock price of $27.05. The current ratio is 13% 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 6.17%. The current dividend yield is 6.84% based on a stock price of $27.05 and dividends of $1.85. The current dividend yield is 11% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 6.12%. The current dividend yield is 6.84% based on a stock price of $27.05 and dividends of $1.85. The current dividend yield is 12% above the 10 year median 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 6.10. The current ratio is 4.97 is based on Revenue estimate for 2025 of $923.3M, Revenue per Share of $5.44 and a stock price of $27.05. The current ratio is 18% below the 10 year median ratio.
Results of stock price testing is that the stock price is probably reasonable and below the median. The dividend yield test is saying that the stock price is reasonable and below the median. The P/S Ratio test confirms this. Almost of the tests are saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1), Hold (4), and Underperform (1). The consensus would be a Buy. The 12 month stock price if $27.53 with a high of $30.00 and a low of $25.25. The consensus stock price of $27.53 implies a total return of 8.61% with 1.77% from capital gains and 6.84% from dividends based on a current stock price of $27.05.
Analyst on Stock Chase give both buy and sell recommendations. The problem is their main tenant is Walmart and apparently that can be a befit or a curse. Walmart pays cheap rent, but can attract other tenants. Sneha Nahata on Motley Fool likes this stock for its high yield. Joey Frenette on Motley Fool likes this stock for its high yield and safe dividends. The company put out a press release via Global Newswire about their fourth quarter of 2024 results. The company put out a press release via Business Wire about their Second Quarter of 2025 results.
Simply Wall Street via Yahoo Finance say this stock is undervalue and its fair value is $38.02. Simply Wall Street has two warnings on this stock of earnings have declined by 2.3% per year over past 5 years; and interest payments are not well covered by earnings.
SmartCentres Real Estate Investment Trust is a Canadian fully integrated commercial and residential REIT, with several strategically located properties in communities across the country. It has one reportable segment, which comprises the development, ownership, management, and operation of investment properties located in Canada. 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 Cargojet Inc (TSX-CJT, OTC-CGJTF) ... learn more on Friday, September 12, 2025 around 5 pm. Tomorrow on my other blog I will write about McCoy Global .... learn more on Thursday, September 11, 2025 around 5 pm.
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