Friday, April 4, 2014

Melcor Developments Inc.

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009.

This is a real estate company that pays dividends twice a year. You really do not know what the dividends will be until they are declared. In most years the dividends go up, but sometimes they also go down. The company has also paid special dividends. Dividends have grown at the rate of 3.6% and 16.4% per year over the past 5 and 10 years.

The last dividend decrease was in 2008, when the dividends decreased some 40% between 2008 and 2009. The most recent increase was in 2013 and it was for 8.7%. The company also paid a special dividend in 2013 that was equal to the full year's dividend. The dividend yield on this stock is moderate with the current dividend at 2.3% and the 5 year median dividend yield at 2.9%.

The 5 year median Dividend Payout Ratios for EPS is 23.7% and for CFPS is 52.6%. The DPR for 2013 was at 33% for EPS and 62% for CFPS. This brings up another point in that the EPS has been higher than the CFPS over the past 3 years. Companies that have higher EPS than CFPS tend to not do as well as companies that have higher CFPS than EPS. (This is a tendency not an absolute.)

I have earned a 14.89% per year total return on this company with 11.84% from capital gains and 3.05% from dividends. The 5 and 10 years total returns on this stock is at 17.17% and 19.83% per year with 13.61% and 15.51% per year from capital gains and 3.56% and 4.33% per year from dividends.

Outstanding shares have basically not changed over the past 5 and 10 years. The outstanding shares have increased due to stock options and decreased due to buy backs. Revenue, Earnings and Cash Flow have all increased nicely over the past 5 and 10 years.

Revenue per Share is up by 22 % and 14.3% per year over the past 5 and 10 years. If you look at the 5 year running averages, they are good, but not quite so good at 8.3% and 11.6% per year over the past 5 and 10 years. This is because exactly 5 and 10 years ago, the company hits lows in revenues.

The EPS is up by 18.4% and 17.9% per year over the past 5 and 10 years. Here again the 5 year running averages show lower increases at 9.5% and 16.4% per year over the past 5 and 10 years.

The Cash Flow per Share is up by 27.1% and 8.7% per year over the past 5 and 10 years. The 5 year running averages over the past 5 years is lower at 7.94% per year increase.

The return on equity has been above 10% over the past 5 and 10 years. The ROE for 2013 is at 12.8% and the 5 year median is at 15.1%. The ROE on comprehensive income is similar with the ROE for 2013 at 13.6% and the 5 year median at 13.6%.

The Liquidity Ratio is very good at 3.18 and with a 5 year median at 3.18. The Debt Ratio is also very good at 1.80 and with a 5 year median at 1.86. Leverage and Debt/Equity Ratios are typical for a real estate company at 2.25 and 1.25.

Although this is a small company and not followed by many analysts, I have been pleased with my investment in this company. I do not currently hold that much of this stock. See my spreadsheet at mrd.htm.

This is the first of two parts. The second part will be posted on Monday, April 7, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor.

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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