Friday, December 3, 2010

H&R Real Estate

I follow a number of REITs and this stock (TSX-HR.UN) is one that I follow. H&R Real Estate was having trouble in 2009 and decreased their dividend by 50%. However, they have since increased their dividends twice in 2010 and the dividends are up about 20% so far this year. They have also announced another 3.5% increase in the dividends to be paid in 2011. However, the dividends are still below those of 2008, which were $1.44 per share. They will be $.90 per share come 2011.

This is a REIT stock, and if you had held it for the last 10 years you would have earned approximately 14% total return, with some 7% of this return coming from distributions. With dividend increases on this stock likely to average around 3% in the future, you would probably be earning, on an investment in this stock today, just over 5% in 5 years and just over 6% in 10 years time. This is called the dividend growth potential of this stock.

When you look at earnings for this stock, it hit a high in 2003 and drifted lower ever since. It is just this year, 2010, that the stock is expect to earn more than that of 2003. The cash flow has done better, but it has only been increasing at the average rate of 4% per year. This is not great, but it is not terrible either. The thing is that the payout ratio of the cash flow has been very high, with an average of about 90% until 2009. This ratio has moderated lately and it is expected to be about 50% for this year (2010).

Over the years, the book value has gone up and down, but its growth has essentially been about 0% for the last 5 and 10 years. This often happens in trust companies where a lot of the earnings are paid out in distributions. The problem with revenues for this company is that, although they have gone up at an ok rate, the revenues per share have not. This trust has been issuing new shares each year at an average rate of just over 12% per year for the last 10 years.

On Monday, I will talk about what the analysts are saying about this stock.

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate principally in the Greater Toronto Area. Its web site is here H&R. See my spreadsheet at hr.htm.

I sold my remaining RIM (TSX-RIM) stock today. I have made a lot of money on it and I would rather have a nice dividend paying stock now. I, of course, have to regrets buying RIM. I love tech stock.

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 for stocks followed and investment notes. Follow me on twitter.


  1. I own H&R and keep it in my TFSA. Sure, the price goes up and down, but that's not why I bought it - there dividends provide me with monthly cash to be reinvested.

    Cheers Susan,
    My Own Advisor

  2. I also own H&R, but in a DRiP plan. I was lucky enough to start the account in 2008, right before the crisis hit. So quite a bit of the purchases I made were during the low prices for the stock. I only wish I had bought more at the time.

    So my average cost per share is $10, which means I'm getting a yield of 8%.

    However, I am not adding money right now, as I feel the price is now too high -- yield has moved down to a bit over 4%.