Artis REIT 2

On my other blog I am today giving answers, as best as I can to recent questions asked about having a dividend stock portfolio continue...

I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. Distributions have only increased by 0.57% over the past 5 years. This is extremely low and way below inflation.

In the insider trading report there is a minimal about insider buying and insider selling with a small net insider selling. The outstanding shares were increase by around 221,000 shares with a book value of $3.5M and this amount of shares were worth around $3.3M at the end of 2013. This number of shares is way less than one half of one per cent of outstanding shares.

There is insider ownership with the CEO owning shares worth around $8.0M and an officer with shares worth around $5.4M. There are not only stock options but there are other stock options like vehicles called Restricted Units. So, there is a moderate amount of insider ownership and stock options.

You cannot do any stock price testing using Price/Earnings per share Ratio as the 5 year low, median and high medina P/E Ratios are 3.18, 3.59 and 4.01. These are so low they are unrealistic to use in a stock price test. The 10 year ratios are even worse because they are negative. The current P/E Ratio is 20.55 based on a stock price of $15.82 and 2014 EPS of $0.77. On an absolute basis, a P/E of 20.55 does seem a bit on the high side for a REIT.

I get a Graham Price of $17.20. The 10 year low, median and high median Price/Graham Price Ratios are 0.71, 1.29 and 1.77. The current P/GP Ratio of 0.92 says that the stock price is relatively reasonable.

The 10 year Price/Book Value per Share Ratio is 1.01. The current P/B Ratio is 0.93 a value some 8% lower. This stock price test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 8.35% a value some 18% higher than the current dividend yield of 6.83%. This stock price test suggests that the stock price is rather high. The historical average dividend yield is even higher at 12.77%. However, the historical median dividend yield is 7.13% and using these figures in the test gives a stock price that is relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold Recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $17.10. This implies a total return of 14.925 with 8.09% from capital gains and 6.83% from distributions.

An article by Biz Journals talks about a recent office purchase by Artis REIT. A Motley Fool article talks about now may be a good time to be in REITs like Artis. The blogger called the Dividend Blogger talked about 6 REITs to consider in August 2013.

Sound bit for Twitter and StockTwits is: Price is reasonable for a REIT. See my spreadsheet at ax.htm.

This is the second of two parts. The first part was posted on Friday, July 18, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Artis REIT's portfolio is comprised of industrial, retail, and office space in Canada and the United States. Its web site is here Artis REIT.

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.

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