Tuesday, March 25, 2014

Richelieu Hardware Ltd

I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF). I initially bought this stock in 2007 because it was recommend by the Investment Reporter. It is not on any of the dividend lists, probably because they only started to pay dividends in 2002and increases are not consistent. This stock would be considered to be a dividend paying growth stock. In 2009, I thought I would add to what I had in this stock. This stock has been much recommended by MPL Communications.

Dividend increases have not been consistent on this stock. Dividends have not been raised every year but increases occurred in most years. The most recent dividend increases are lower than they have been in the past. The most recent increase was for 2014 and the increase was for 7.7%.

I paid more for the stock I bought in 2007 than I did for the stock I bought in 2009. For the stock bought in 2007, my yield on my initial purchase at 7 years ago is 2.3%. For the stock I bought in 2009, my yield on my initial purchase at 5 years ago is 3.1%.

I have made a total return of 20.26% per year on this stock. Of this total return 18.64% per year is from capital gains. Only 1.62% per year is from dividends. Dividend yields are rather low with the 5 year median dividend yield at 1.53% and the current dividend at just 1.19%. The dividend increases have been good with the 5 and 10 year dividend growth at 10.2% and 11.2% per year.

The total return on this stock over the past 5 and 10 years is at 17.46% and 9.06% per year. The capital gains portion of this total return is at 15.91% and 7.92% per year. The dividend portion of this total return is at 1.55% and 1.15% per year.

The outstanding shares have decreased slightly over the past 5 and 10 years, with the decline in outstanding shares at 1.8% and 1.4% per year. Shares have increased due to stock options and decreased due to Buy Backs. Revenues, earnings and cash flows have increased nicely over the past 5 and 10 years.

Revenue per Share is up by 7.8% and 9.7% per year over the past 5 and 10 years. EPS is up by 7.3% and 8.5% per year over the past 5 and 10 years. Cash Flow per Share is up by 6.2% and 9.3% per year over the past 5 and 10 years.

I have Return on Equity figures going back to 1993 and for all the years I have the ROE has been over 10%. The ROE for 2013 was 13.1%. The 5 year median ROE is at 12.2%. The ROE on comprehensive income has been somewhat similar to the ROE on net income. The ROE on comprehensive income for 2013 is 17.3% and the 5 year median ROE is 15%.

The debt ratios are all very good. The Liquidity Ratio is 4.51. The Debt Ratio is 5.64. The Leverage and Debt/Equity Ratios are 1.22 and 0.22. The CEO has shares worth around $65.9M which is around 7% of the outstanding shares. This could be the reason why the debt ratios are so good.

I bought this stock for diversification and because it is a dividend growth stock. It is more of a growth stock than a dividend stock as the dividend yield is low. See my spreadsheet at rch.htm.

This is the first of two parts. The second part will be posted on Wednesday, March 26 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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. This stock is widely held. Its web site is here Richelieu.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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