Richelieu Hardware Ltd

I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC- RHUHF). I first bought this stock in 2007 because it was on the Investment Reporter's list of good stocks to own. After I bought it the stock proceed to go down for the next two years. When I reviewed the stock in March 2009, I had lost 16% per year.

However, The Investment Report does follow good stocks. Also, the company had good growth in revenue, earnings, dividend, book value and cash flow. So in 2009, I bought some more. To date, I have earnings of 20.28% per year on this stock. They only started to pay dividends in 2002 and dividend yield is low. The portion of my return attributable to dividends is 1.27% per year and the portion attributable to capital gains is 19.01% per year. Investment Reporter is produced by MPL communications .

The stock is considered to be a dividend growth stock. The dividends have grown at the rate of 11.4% and 15.9% per year over the past 5 and 10 years. The current dividend yield is just 1.43%, but the 5 year dividend yield is a bit higher at 1.58%. Commiserate with the low dividend yield is low Dividend Payout Ratios. The 5 year DPRs for EPS is 22.3% and for Cash Flow is 18.3%.

Over the past 5 and 10 years to the end of 2012, this stock has had total returns of 10.19% and 11% per year. The portion of these returns attributable to dividends is 1.32% and 1.27% per year. The portion attributable to capital gains is 8.87% and 9.73%. (I did better because I bought this stock at a low price in 2009.)

The outstanding shares have been decreasing over the past 5 and 10 years at the rate of 2% and 0.9% per year. Outstanding share are increased due to stock options and decreased because of share buy backs. Revenues have increased over the past 5 and 10 years by 5.3% and 8% per year. Revenues per Share have increased at 7.6% and 9% per year over the past 5 and 10 years.

The Earnings per Share have increased by 8% and 9.9% per year over the past 5 and 10 years. The Cash Flow per Share has increased by 9% and 10.4% per year over the past 5 and 10 years and the Book Value per Share have increased by 8.6% and 12.3% per year over the past 5 and 10 years.

Return on Equity is very good with the ROE for the financial year ending November 2012 at 16.2% and the 5 year median ROE at 15.5%. (ROE has not been lower than 10% over the past 5 years.) The ROE on comprehensive income is fairly close coming in at 15.8% and the 5 year median at 15%.

The company has a very strong balance sheet, with the current Liquidity Ratio at 4.57 and the Debt Ratio at 5.65. The Leverage and Debt/Equity Ratios are also good at 1.23 and 0.22, respectively.

I think that this stock has been a very good investment for me. It is the sort you would buy when building a portfolio when you do not need much in the way of dividend income. The thing with dividend paying stock is that they tend to be more disciplined than non-dividend paying stock.

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 or StockTwits.