Rogers Sugar Inc

I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has converted to corporation.

When this stock converted to a corporation they decreased the dividend some 26%. This was in 2011. In 2012, they increased the dividend by 5.9%. Prior to this they had a mixed record. Dividend yields were high (9 to 13%), but they lowered as well as raised their dividends. Dividends are still quite good at 5.83%, but not as good as before.

It is not bad that a company changes it dividend based on what it can pay, however, if you are living off you dividends, you have to take this into consideration before investing in this company. Companies that vary their dividends tend to decrease them in bad times and raise them in good times. Also, because this company is no longer an income trust, they will not go back to the very high dividends of past years.

The 5 year median Dividend Payout Ratios are 91.34% per year for earnings and 57.55% per year for cash flow. The DPR for earnings are quite high. For the financial year ending September 2011 the DPR for earnings was 82.2%. However, the DPR for earnings is expected to get much better for 2012 and is expected to be around 68.6%.

The total return over the past 5 and 10 years is 12.48% and 11.51%. The interest portion of this return was 9.44% and 9.55% per year, respectively. The capital gain portion was 3.04% and 1.96% per year, respectively. As you can see, most of the return was in dividend income and this came in at 76% and 83% of total returns over the past 5 and 10 years. Dividend returns will be lower going forward.

There was a big increase in shares outstanding in both 2002 and 2003. The increase in shares over the past 10 years is therefore rather high at 7.9% per year. The increase in shares outstanding over the past 5 years is very low at just slightly above 0%. Outstanding share changes can affect the per share values under a company.

The revenues of this company have grown at the rate of 2.8% and 12.7% per year over the past 5 and 10 years. The revenue per share has grown at the rate of 2.8% and 4.4% per year over the past 5 and 10 years. The big difference in the 10 year growth between revenue and revenue per share is due to the big increase in shares over the past 10 years. Revenue growth is important, but as an owner of shares, the growth per share is also quite important.

Earnings per share are a different story with growth at 1.9% and 0% over the past 5 and 10 years. Cash Flow growth is also non-existent as it has declined over the past 5 years by 1.4% and grew over the past 10 years at just 1.4%. However, over the past 10 years, they just had 1 year with negative earnings and no years with negative cash flow.

Book values do not do well under income trust companies, so it is not surprising that over the past 5 years book value per share has only grown at 2.8%. The book value per share has declined over the past 10 years by just over 7% per year.

Return on Equity has in the last 5 years been in the good 10% to 15% range and sometimes even in the very good 15 to 20% range. The 5 year median ROE is 16.6%. The ROE at the end of financial year of 2011 was 15.2%. The ROE based on comprehensive income was also 15.2% in the 2011 financial year. This basically tells you that the quality of earnings is probably good. The 5 year median ROE based on comprehensive income is also 16.6%.

The Liquidity Ratio for the financial year of 2011 was low at 1.32. At the end of the 2nd quarter of 2012 it is better at 1.41, but this is still a bit low. The 5 year median is lower still at just 1.16. However, the debt ratio has varied quite a bit over the years.

The Debt Ratio is currently at a very good 1.91 and this is not far from the one for the financial year ending in September 2011 at 1.90. The 5 year median Debt Ratio is 1.89.

The current Leverage and Debt/Equity Ratios are fine at 2.11 and 1.11 respectively. These are close to the 10 years ratios of 2.17 and 1.15, which are also fine.

Rogers Sugar is a mature and low growth business. There are good dividends to be made, but probably not much in way of capital gains. Let's face it a 5.8% income is quite a good return today. However, dividends have fluctuated in the past.

Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Husky. See my spreadsheet at rsi.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.