Friday, March 19, 2010

Canadian Real Estate Inv 2

I am continuing my reviewing this stock (TSX-REF.UN) today as the annual reported for December 2009 has been published and this is a stock that I own. I bought shares in this company in September 2006 and my total return to date has been 7% per year. Dividends are good and it is a diversification away from banks and utility stock.

When I look at the Insider Buying and Insider Selling report, I find that over the past year there has been Insider Buying of around $1.1M. All this buying occurred in the early part of 2009 when the stock price was a bit lower at about $20 to $24. There recently has been a very small amount of Insider Selling by a director. The dividend was increase last year by a fairly normal 1.5% so this shows the management of the company feels confident enough to raise dividends.

When looking at the P/E ratio, the 5 average low is 16.8 and the 5 year average high is 23.6. The current P/E is higher than this at 25.3. The problem is that Earnings are expected to be much lower in 2010 than they were in 2009. If you look at the P/Funds from Operations ratio, the 5 year low average of 10.6 is much closer to the current P/FFO of 12 and this is lower than the 5 year high average of 14.8. This is because the company’s FFO is expected to be about the same as last year.

If you look at the dividend yield, the current one at 5% is just a bit lower than the 5 year average of 5.3%. However, a good current stock price for buying would have a higher yield than the 5 year average. Because the Book Value is not growing much, the Graham Price is above the current stock price. For 2010, I get a Graham Price of $16.91. The Graham Price for 2009 was higher at $19.29. The current price is only some 44% above the 2009 Graham Price. It is much farther away from the 2010 Graham Price. The other thing is that it is April and you do not tend to get the best stock prices in April. It’s that seasonality thing with the stock market.

So, what do the analysts recommend? When I look at the recommendations, I find lots of Strong Buys, some Buys and lots of Holds. I also find one Sell recommendation. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.) The most common remark on this stock is that the dividend is good and it is secure.

I intend to continue to hold my shares, as the dividends are good and this stock is to diversify my portfolio.

This company is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices) because they consistently raise their dividend every year. I also noted that the blog Think Dividends has recently mentioned this stock.

Canadian Real Estate Investment Trust is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. 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. Also, look at other investing notes on my website at Follow me on twitter.

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