Tuesday, March 22, 2011

Canadian Real Estate Investment Trust

I bought this stock (TSX-REF.UN) in September 2006. I have made a total return of 10.1% per year on this stock. I estimate that the dividend portion of my total yearly return would be between 5% and 5.5%. This company is on one of the dividend lists that I follow of Dividend Achievers .

They have raised their dividend each year since 2002. The growth in distributions for the last 5 and 10 years is 1.90% and 1.77% each year, respectively. According to the Bank of Canada, core inflation has grown over the last 5 and 10 years at the rate of 1.78% and 1.87% per year, respectively. Also, Total Inflation has grown over the last 5 and 10 years at the rate of 1.78% and 1.97% per year, respectively. So from this you can see that distributions have done slightly better than inflation over the past 5 years and slightly worse than inflation over the past 10 years.

The current distribution yield is 4.4% and the 5 year average is 5%. This is a Real Estate Investment Trust type of company and what you can expect from it is a good yield, but your increases will be about the rate of inflation. In my portfolio, I have this type of stock, plus stock with lower yields, but higher rates of increases. Overall, my growth in dividends is above the rate of inflation, or even background inflation. Note that long term background inflation is considered to be at the rate of 3% per year.

When you look at growth figures for this company, the worse is for Book Value. Over the past 5 and 10 years, the book value has grown at the rate of 3.7% and 2% per year, respectively. This is rather typical for an Income Trust company. Do not forget that in the calculation of Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO), the replacements for the older Distributable Income, you include depreciation and amortization expenses.

The amount available for distribution has grown over the past 5 and 10 years at the rate of 10.4% and 6.8% per year, respectively. However, the way to calculate this value has been changing. Earnings have been growing well, with the growth over the past 5 and 10 years at 19% and 7.6% per year, respectively. Total Return has grown over the past 5 and 10 years at the rate of 12% and 18.5% per year, respectively.

Revenue growth per share is rather low having only grown, over the past 5 and 10 years at the rate of 3% and 3.8% per year, respectively. Cash Flow from Operations is better over the past 5 and 10 years, growing at the rate of 10% and 9.6% per year, respectively.

Overall, I am pleased with my investment in this company. Tomorrow, I will talk about what the analysts say about this company and what my spreadsheet says about its current stock price.

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 here CDN Real Estate . See my spreadsheet at ref.htm.

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.

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