Thursday, June 4, 2009

Calloway REIT

I am reviewing this stock (TSX-CWT.UN) today as it is on the Dividend Achievers list at I am gradually doing spreadsheets on all the companies on this list. I do not own stock in this company.

I know that people complain somewhat about this list, as the qualifications on this Canadian list are lower than on the comparable US list. The US list has companies that have increased their dividends for the last 10 years and for the Canadian list, companies must only have increased their dividends for the last 5 years. However, what you want to know what a stock has done recently, so to look at increases dividends for the last 5 years is not bad. However, this does not mean that I endorse all stocks that raise their dividends. On the contrary, I like companies to raise their dividends only as they can afford them.

When looking at the 5 and 10 year growth rates on this company, some are fine, but some I find worrisome. The growth of the Distributable Income is growing at about the rate of the distributions and the cash flow is growing a bit faster. However, I find that the payout ratios are very high. It seems that few people expect that the distributions are going to grow over this year and or next. The distributions were last changed in August 2007 and there was no increase in 2008. Even with distributions staying the same, it would appear that the payout will remain high.

The Asset/Liability is good at 1.51. However, the Return on Equity is low. The 5 year average is just 3% and the ROE for 2008 was a bit better at 6%. This company seems to have always have had a low ROE. Also, the Accrual Ratio has a tendency to be rather high. This could call into question the quality of the earnings for this company.

At the present, I have no intentions of buying this stock. The payout ratio is too high and the dividend increases have come to a halt. I already have some REITs and I am happy with what I have. I will, however, look to see what analysts are saying about this stock tomorrow.

Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is See my spreadsheet at

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. See my website at for a list of the stocks for which I have put up spreadsheets.

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