Wednesday, February 28, 2018

Atrium Mortgage Investment Corp

Sound bite for Twitter and StockTwits is: Interesting Dividend Stock. It seems like the stock is at a relatively reasonable price. This stock pays well, but capital gain is low. See my spreadsheet on Atrium Mortgage Investment Corp.

I do not own this stock of Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF). I saw this on company on the Canadian Dividend All-Star List. It has just recently started to pay dividends and dividends are good.

This company went on the TSX in 2012, just 5 years ago. Most of the total return is in dividends. Over the past 5 years total return is 10.35% with 2.73% from capital gains and 7.61% in dividends. Also shares are increasing a lot with the 5 and 8 year increase at 9.55% and 23.47%. In 2017 outstanding shares were up by almost 23%.

When they issue their financial results in February each year, they also declare a special dividend so that all of their earnings during the previous year that ended December 31 are paid out to their shareholders. Their payout ratio during the year is around 90%, but including the special dividend, their payout ratio is approximately 100%.

It would also seem that their dividends are taxed as interest income as they are a Mortgage Investment Corporation. Because of this it might be a product more suitable for a TFSA or RSP or RIF accounts. It is like the old income trust stock

Their dividend yields are high and they are currently at 7.10% based on dividends of 0.90 and a stock price of $12.68. So far their dividend high is 8.26% and their dividend low is 6.63% with a median of 7.22%. They also give a special dividend in February of each year so that they pay out all their income to shareholders. The special dividend paid has a median of $0.08 giving an extra yield each year around 0.6%.

The growth in dividends is low. The 4 year growth is 4.6% per year. However, for the past 3 years growth in dividends has been less than 2.5% and the dividends grew just 2.3% in 2018. It would seem that growth in dividends is currently around inflation growth.

I cannot talk about long term return as this company only started to trade in 2012 which is 5 years ago. I can get a stock price back to 2009 using what the company sold stock at. However, when they sold stock in 2009, 2010 and 2011 it was all for $9.90.

They debt ratios are good. The Long Term Debt/Market Cap Ratio is 0.35. The Debt Ratio is 2.25. The Leverage and Debt/Equity Ratios are 1.80 and 0.80 and these are also good. It would seem that the current assets can cover current liabilities, but for such stock the Liquidity Ratio is often ignored.

The Return on Equity is a little low with the one for 2017 at 8.3% and the 5 year median at 8.5%. The comprehensive income ROE is that same as the ROE on net income.

Revenue is growing strongly but EPS is not. Because the company is increasing their outstanding shares, you have to look at per share values to see if there is growth. For Revenue the 5 and 7 year growth is at 23.9% and 29%. However if you look at Revenue per Share growth it is much lower and this is the real growth. The Growth in Revenue per Share over the past 5 and 7 years is 13.1% and 6.7% per year. EPS has only growth at 1.8% and 0.5% per year over the past 5 and 7 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.65, 12.40 and 13.30. The current P/E Ratio is 12.94 based on a stock price of $12.68 and 2018 EPS estimate of $0.98. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a Graham Price of $15.21. The 8 year low, median and high median Price/Graham Price Ratios ate 0.73, 0.79 and 0.85. The current P/GP Ratio is 0.83 based on a stock price of $12.68. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, any P/GP Ratio below 1.00 is considered to be low.

The 8 year median Price/Book Value per Share Ratio is 1.11. The current P/B Ratio is 1.21 based on Book Value of $349M, Book Value per Share of $10.50 and a stock price of $12.68. The current P/B Ratio is some 9% higher than the 8 year median. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, any P/B Ratio below 1.50 is considered to be low.

I get a historical median dividend yield of 7.22%. The current dividend yield is 7.10% based on a stock price of 12.68 and dividends of $0.90. The current yield is some 1.70% below he historical median. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 7 year Price/Sales (Revenue) Ratio of 7.89. The current P/B Ratio is 7.56 based on 2018 Revenue estimate of $55.8M, Revenue per Share of $1.68 and a stock price of $12.68. The current ratio is some 4.2% below the 7 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations I find Buy (1) and Hold (1) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $12.75. This implies a total return of 7.65% with 0.33% from capital gains and 7.10% from dividends based on a current stock price of $12.68.

There is a press release at Stockhouse about the financial year 2017. In an article in Real Estate News Exchange CEO of Atrium is upbeat about the future. Becky Mayes writes on Simply Wall Street about this company. She complains about the high payout ratio, but because this company is a Mortgage Investment Corporation it must payout all its earnings.

Atrium Mortgage Investment Corp is a non-banking finance company providing residential and commercial mortgages that lends in major urban centers in Canada where the stability and liquidity of real estate are high. Its web site is here Atrium Mortgage Investment Corp .

The last stock I wrote about was about was Bombardier Inc (TSX-BBD.B, OTC-BDRBF)... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC- RIOCF)... learn more on March 2, 2018 around 5 pm. Tomorrow on my other blog I will write about A Portfolio.... learn more on Thursday, March 1, 2018 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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