Granite REIT

On my other blog I am today writing about possible cheap dividend stocks for October 2015 learn more...

Sound bite for Twitter and StockTwits is: stock is cheap to reasonable. It is hard to judge this stock as there have been a lot of changes with the company refocusing on Real Estate Revenue in 2012 and recent management changes. You wonder where it is going to go. See my spreadsheet on Granite REIT.

I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U), but I used to. I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock.

By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.

The company used to report in US$ and pay dividends in US$. In 2012 they started to report in CDN$ and pay dividends in CDN$. The current dividend is a good one at 6.03%. The dividend increases have been good with the 5 and 10 year dividend growth at 28.4% and 17.6% per year in CDN$. However, the only reason for the good growth was the high dividend increase of around 150% given in 2012.

In the past dividends have both gone up and gone down. The most recent dividend increase was in 2015 and it was for 4.9%. The dividend increase in 2014 was for around 9.1%.

It is probably best to base a Dividend Payout Ratio on the Funds from Operations (FFO). This company does not always give out an EPS (although it can be calculated). They have been giving out an FFO value since 2002. The current DPR based on FFO is 82.6%. A 5 year median DPR based on FFO is probably not helpful since they did a big dividend increase in 2012.

The number of outstanding shares has not really changed over the past 5 and 10 years. They used to have other revenue besides Real Estate Revenue, but since they only now only have Real Estate Revenue, I will discuss that. Growth in Revenue is non-existent to moderate. FFO growth is low to good. Cash Flow growth is low to good.

Revenue has fallen by 2.5% per year over the past 5 years and has grown by 3% over the past 10 years. Analysts expect modest growth in Revenue in 2015.

FFO is up by 17.5% and 1.4% per year over the past 5 and 10 years. Analysts expect good growth of around 9% for 2015. However, if you compare the 12 month period to the end of 2014 with the 12 month period to the end of the second quarter, FFO is flat. (There can also be a problem with FFO as not everyone calculates it in the same way.)

Cash Flow is up by 2.5% and 8.4% per year over the past 5 and 10 years. CFPS is up by 2.3% and 8.6% per year over the past 5 and 10 years. No Analysts is giving estimates for cash flow. However, if you compare the 12 month period to the end of 2014 with the 12 month period to the end of the second quarter, Cash Flow is up by 33%.

The Liquidity Ratio could be better. It tends to jump around a lot. For 2014 this ratio is just 0.90. For the end of the second quarter it is 1.14. The Debt Ratio has been generally good as has the Leverage and Debt/Equity Ratios. The Debt Ratio for 2014 is 3.02. The Leverage and Debt/Equity Ratios for 2014 are 1.50 and 0.50.

It is probably best to use P/FFO Ratios for looking at stock price than the P/EPS Ratios. The 5 year low, median and high median P/FFO Ratios are 11.64, 13.52 and 15.69. The corresponding 10 year ratios are 11.00, 12.85 and 14.97. The current P/FFO Ratio is 10.95 based on 2015 FFO estimate of $3.49 and a stock price of $38.22. This stock price testing suggests that the price is relatively cheap.

I get a Graham Price of $53.49. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.74 and 0.86. The current P/GP Ratio is 0.71. This stock price testing suggests that the stock price is relatively reasonable and below the relative median.

The historical median dividend yield is 2.68%. The current dividend yield is 6.03% is some 124% higher. This stock price testing suggests that the stock price is relatively reasonable and below the relative median. (This stock has an historical high dividend yield of just over 11.00%).

When I look at analysts' recommendations, I find 4 analysts following this stock and all give a Hold Rating. The consensus rating would be a Hold. The 12 month stock price consensus would be $44.00. This implies a total return of 21.15% with 15.12% from capital gains and 6.03% from dividends.

The site of Stock Chase shows some analysts' thoughts on this stock. There have been recent management changes and this REIT has a huge exposure to Magna (TSX-MG).

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite 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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