Granite REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. Price is probably in the reasonable range. This is a REIT with some good changes in the past little while. See my spreadsheet on Granite REIT.

I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U). 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.

Dividend started out low with a yield in the 1% range. However, with the decrease in the stock price (a decline of almost 75%) the yield of course went high. At one point it was more than 12%. The stock price went up and the yield drifted down to the 2 to 3% range. There was a significant increase in dividends in 2012 when the company became a REIT. The increase in 2012 was 145%.

Since the stock was spun from Magna in 2003, dividend rates have both gone up and down. There was a significant increase when it became a REIT. The dividend growth over the past 5 and 10 years is at 24% and 13% per year. The most recent increase was in 2017 and the increase was for 6.9%.

They have not gone well in growing their Revenue or FFO Outstanding shares have not changed much. Revenue has grown by 3.6% and 0.3% per year over the past 5 and 10 years. FFO has grown by 7.4% and is down by 0.5% per year over the past 5 and 10 years.

However they have done better in growth cash flow and net income. Cash Flow less WC is up by 6.8% and 11.3% per year over the past 5 and 10 years. Net income is up by 11.9% and 14.9% per year over the past 5 and 10 years.

The stock market highs of 2007 were not passed again until 2015. The total return to the end of 2016 is at 12.53% and 3.87% per year with dividends 5.94% and 3.14% and capital gains of 6.59% and 0.73%. If you look at total returns over the past 5 and 10 years to date you get total returns of 11.29% and 10.15% with 5.48% and 4.07% from dividends and 5.81% and 6.08% from capital gains. The current better returns for the 10 year period is because 10 years ago today the stock price is substantially lower than from 10 years ago to the end of 2016.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.12, 12.01 and 12.96. The 10 year corresponding values are 8.11, 9.31 and 10.50. The 14 year ratios are the same as the 10 year ratios. The current P/E Ratio is 9.33 based on a stock price of $50.07 and EPS for the latest 12 month period. This stock price testing suggests that the stock price is reasonable and around the median.

Because this is a REIT I looked at Price/Funds from Operations Ratios also. The 5 year low, median and high median P/FFO Ratios are 11.34, 12.61 and 13.57. The 10 year corresponding values are 10.94, 12.40 and 13.87. The current P/FFO Ratio is 15.50 based on 2017 FFO estimate of $3.23 and a stock price of $50.07. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $55.02. The 10 year low, median and high median Price/Graham Price Ratios are 0.67, 0.75 and 0.83. The current P/GP Ratio is 0.91 based on a stock price of $50.07. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 1.01. The current P/B Ratio is 1.20 based on Book Value of $1,962M, BVPS of 441.65 and a stock price of $50.07. The current P/B Ratio is some 19% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. If the current P/B Ratio was 20% higher than the 10 year ratio the stock price would be relatively expensive. So it is very close to expensive.

I get an historical median dividend yield of 3.29%. The current dividend yield is 5.20% based on dividends of $2.60 and a stock price of $50.07. The current dividend yield is some 58% higher than the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get 5 year median and 10 year median dividend yields of 5.65% and 5.55%. The current dividend yield of 5.20% is 7.89% and 6.29% lower than the 5 and 10 year median dividend yields. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a 10 year median Price/Sales (Revenue) Ratio of 8.57. The current P/S Ratio is 9.37 a value some 9.3% higher. The current P/S Ratio is based on 2017 estimate revenue of $220M, Revenue per Share of $4.67 and a stock price of $50.07. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations, I find Buy (1) and Hold (5). The consensus recommendation would be a Hold. The consensus 12 month estimate stock price is $48.64. This implies a total return 2.34% with a capital loss of 2.86% and dividends of 5.20%.

Nelson Bennett on Business Vancouver talks about the recent shake-up of the board of this REIT. Trapping Value does a review of this stock on Seeking Alpha. This press release on Cision talks about this REIT acquiring a portfolio in the US. This is what the activists shareholders wanted. Joyce Ramirez on The Ledger Gazette talks about Desjardins increasing their Q4 2017 earnings for this REIT. See what analysts are saying about this REIT on Stock Chase. There are very few analysts following this stock.

Granite is a Canadian-based REIT engaged in the ownership and management of predominantly industrial, warehouse and logistics properties in North America and Europe. Granite owns approximately 30 million square feet in over 90 rental income properties. Our tenant base includes Magna International Inc. and its operating subsidiaries as our largest tenants, in addition to tenants from other industries. Its web site is here Granite REIT.

The last stock I wrote about was about was Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF)... learn more. The next stock I will write about will be Le Chateau Inc. (TSX-CTU.A, OTC-LCUAF)... learn more on Wednesday, October 4, 2017 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks October 2017... learn more on Tuesday, October 3, 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.

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