Monday, March 6, 2017

H & R Real Estate Trust

First of all I want to say that I sold some Toronto Dominion Bank (TSX TD-NYSE-TD) to buy some Home Capital Group (TSX-HCG, OTC-HMCBF). I bought TD Bank for my RRSP account in 2009 and I have done very well with it. However, I feel I have too much of this stock and I also bank with them. Home Capital Group is selling at a good price currently.

Sound bite for Twitter and StockTwits is: Buy for Diversification. Sometimes good companies get into difficulties and returns on an investment can suffer for a while. This REIT seems to be selling at a relatively reasonable price that is around the median. See my spreadsheet on H & R Real Estate Trust.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

As you would expect on an REIT, the dividend yields are good. The current dividend yield is 5.99% based on a stock price of $23.05 and dividends or distributions of $1.38. The 5 year median dividend yield is 5.97% and the historical median dividend yield is 6.47%.

The dividend growth is uneven. The dividends have grown at 6.86% and 0.17% per year over the past 5 and 10 years. They reduced their dividend by 50% in 2009 because the payout ratios were getting too high. This is the reason for the low 10 year dividend growth. Dividends are not quite back up to the 2008 distributions of $1.44 as they are currently at $1.38.

The current Dividend Payout Ratios based on AFFO is at 86.7% for 2016 with a 5 year one at 88.4%. The DPR for FFO is for 201669% with a 5 year DPR of 70.3%. Generally Dividend Payout Ratios for REITs are based on AFFO or FFO values.

Generally for REITs you look at Price/FFO Ratios rather than Price/Earnings per Share Ratios. The 5 year low, median and high median P/FFO Ratios are 11.06, 11.88 and 12.92. The corresponding 10 year values are 11.03, 12.19 and 13.43. The current P/FFO is 12.20 based on a stock price of $23.05 and FFO estimates for 2017 of $1.89. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a Graham Price of $32.10. The 10 year Price/Graham Price Ratios are 0.66, 0.72 and 0.85. The current P/GP Ratio is 0.72 based on a stock price of 23.05. This stock price testing suggests that the stock price is reasonable and around the median.

Because all REITs had much higher yields in the past, I have been looking at the current yield compared to the 5 year median. The current yield is 5.99% and this is close to the 5 year median yield of 5.97%. The current yield is based on a stock price of $23.05 and distributions of $1.38. This stock price testing suggests that the stock price is reasonable and around the median.

Because the new accounting rules made the book value on all REITs go higher, I am using the 5 year median Price/Book Value per Share Ratio for stock testing purposes. The 5 year median is 0.94. The current P/B Ratio is 0.95 based on BVPS of $24.23 and a stock price of $23.05. This stock price testing suggests that the stock price is relatively reasonable and around the median.

This REIT has not done particularly well in term of total returns over the past 5 and 10 years. The 5 and 10 year total return is at 4.84% and 7.02% per year. For the past 5 years there is a capital loss of 0.89% per year. For the past 10 years there is a capital gain of 1.51% per year. The portion of the total return attributable to distributions is at 5.72% and 5.51% per year

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month stock price is $25.36. This implies a total return of 16.01% with 5.99% from dividends and 10.02% from capital gains.

This company announced their 2016 results on New Wire. They also talked about some sales they were doing. Daniel Jordon on Sports Perspectives talks about Royal Bank increasing their price objective. Kay Ng of Motley Fool likes this REIT for the good yield. See what analysts are saying about this stock on Stock Chase. They mostly like it.

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H & R Real Estate Trust.

The last stock I wrote about was about was Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC- APYRF)... learn more . The next stock I will write about will be Canadian Tire Corp. (TSX-CTC.A, OTC-CDNAF)... learn more on Wednesday, March 8, 2017 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks March 2017... learn more on Tuesday, March 7, 2017 around 5 pm.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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