Tuesday, May 22, 2012

Richelieu Hardware Ltd

Posted blog entry on whether I am currently making any money and on dividend payers at comments blog.

I own this stock of Richelieu Hardware Ltd. (TSX-RCH). I first bought this stock in 2007 and then some more in 2009. Since this stock is in two separate accounts, I can see how each purchase has done. For the stock purchased in 2007, I have made a return of 7.6% per year. For the stock I purchased in 2009, I have made a return of 24.9% per year. I realized that the stock was quite low in 2009 when I bought it.

Over all I have made a return of 19% per year. 1.7% of my return is from dividends and 17.3% of my return is from capital gain. Only some 9% of my return is from dividend income. This purchasing also shows the value of purchasing shares over time rather all at once.

Dividends are low on this stock which has a 5 year median dividend yield of 1.58%. However, dividends in recent years have been higher than historically as the 10 year median dividend yield is lower at just 1.18%. Dividends were only started on this stock in 2002, so this stock has not been a dividend payer for long.

The stock has an inconsistent record when it comes to dividend raises. There was one year when dividends where flat and one year when they declined, but the rest had increases. The 5 and 9 year growth in dividends is quite good at 12.9% and 16.7% per year, respectively. This stock would be considered to be a dividend growth stock.

I started to following this stock initially because it was on the Investment Reporter list from MPL Communications. Their site is called Advise for Investors. They sometimes cover this stock in their Advice Hotline email for which you can get a free subscription from their site. You can get their latest advice on this stock from their site if you ask for a quote on symbol RCH, click on profile tab and then click on Advice tab.

The growth on this stock is mainly quite good, with the 10 year growth figures better than the 5 year ones. Revenues per share have grown at the rate of 8.5% and 9.6% per year over the past 5 and 10 years. EPS has grown at the rate of 6.5% and 10.7% per year over the past 5 and 10 years. Cash Flow has grown at the rate of 8.7% and 11.8% per year over past 5 and 10 years. Book Value has grown 10.3% and 13.9% per year over the past 5 and 10 years.

The debt ratios are quite good also. The Liquidity Ratio has always been very good with a current ratio of 4.20 and a 5 year median of 4.00. The Debt Ratio extremely good with a current ratio of 5.32 and a 5 year median of 5.49. The current Leverage and Debt/Equity Ratios are also good at 1.25 and 0.23, respectively.

The Return on Equity is in the good range of 10% to 15% at 14.3%. The 5 year median ROE is a bit better at 15.5%. The Return on Equity based on comprehensive income is in the same range with an ROE of 14.3% and a 5 year median value of 14.3% also.

Richelieu has also done well in their first quarter of 2012 and news is mostly good. See G&M article.

Personally, I think that a dividend paying portfolio should have stocks with a range of dividend yields. This is because low dividend yields often come with good dividend growth and good capital gain growth. This would also be a suitable stock when you are growing your stock portfolio as lower dividends mean lower taxes.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. Its web site is here Richelieu. See my spreadsheet at rch.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.

1 comment:

  1. Susan,

    I am struggling with the question “Am I making money in the stock market?” Because of the current state of the market, my portfolio is down, but then I am still getting dividend income on a regular basis. Am I making money because I am receiving dividend income? Perhaps the dividend income is really like return of capital. Say your portfolio is down 15% and you are getting 4% dividend. It is like taking money from your portfolio and paying yourself as dividend. I cannot be making money if I add up the value of my portfolio and the dividend received, and the total amount is less than what I originally invested.

    Sorry, I am just thinking out loud to myself.