I own this stock of RioCan Real Estate (TSX-REI.UN, OTC-RIOCF). I first bought this stock 1998 because I wanted to diversify my portfolio into REITs. It was a stock covered and recommended by MPL Communications in their Income Trust coverage. Over the years I have made several more purchases of this REIT.
When I was updating my spreadsheet, I noticed that my overall return was good, but it really mattered with each account on when I bought this stock. Overall my total return is 11.75% per year with 2.85% from capital gains and 8.90% from distributions. This is a REIT so you expect to earn most from distributions.
For my trading account, I bought this stock in 2000, 2002, 2011 and 2014. For this account, my total return is 15.21% per year with 4.93% from capital gains and 10.28% from distributions. For my Pension account, I bought stock in 2006, and 2010. My total return for this account is 7.87% per year with 1.70% from capital gains and 6.17% from distributions. For my RRSP account I bought stock in 1998 and 2013. On this account I have a total return of 9.32% per year with 1.11% from distributions and 8.21% from capital gains.
I have read articles that if you are buying long term, you need not worry about the cost of the stocks because that over the long term you will make the same on stocks. The above shows something different. I think time of purchase really counts for the long term. Or, maybe this is pointing to that it would be best to buy shares of what you want to own over a period of time.
As with most REITs, this one has a good dividend yield. The current dividend yield is 5.76% with 5, 10 and historical yields at 5.37%, 5.47% and 7.47%. If you had purchased this stock at a median price 5, 10, 15 or 20 years ago, you would be making a yield on your original price of 5.48%, 9.22%, 8.75% or 15.65%. If you buy dividend growth stock in a portfolio for retirement, a lot of the growth will be growth in income.
The other thing with dividends on REITs is the low growth in dividends. Growth in dividends has been low as you can see in the chart below. However, over a long period, you are still making a very good yield. When you have REITs in your portfolio, a big part of your total return is in dividends.
When you look at EPS to judge if they can afford their dividends, the Dividend Payout Ratio is 86% in 2018 with 5 year coverage at 80%. For REITs, it is generally acceptable to look at DPR in connection with Funds from Operations (FFO). For 2018, the DPR for FFO is 78% with 5 year coverage at 79%.
The Long Term Debt/Market Cap Ratio for 2018 is 0.68. This is fine. I do calculate a Liquidity Ratio, but this ratio is not considered important for REITs. The Debt Ratio is good at 2.21. The Leverage and Debt/Equity Ratios are also good at 1.83 and 0.83.
The Total Return per year is shown below for years of 5 to 24 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 0.42% | 5.00% | -0.80% | 5.80% |
| 2008 | 10 | 0.56% | 14.04% | 5.71% | 8.33% |
| 2003 | 15 | 1.56% | 10.46% | 2.99% | 7.47% |
| 1998 | 20 | 2.09% | 14.38% | 4.75% | 9.63% |
| 1994 | 24 | 5.16% | 21.29% | 7.19% | 14.11% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.67, 12.51 and 13.36. The corresponding 10 year ratios are 11.25, 12.06 and 13.12. The corresponding historical ratios are 11.64, 12.82 and 13.36. The current P/E Ratio is 14.22 based on a stock price of $25.02 and 2019 EPS estimate of $1.76. This stock price testing suggests that the stock price is relatively expensive.
Because this is a REIT, we should repeat this testing using FFO. The 5 year P/FFO Ratios are 13.18, 14.13 and 15.43. The corresponding 10 year ratios are 13.35, 14.92 and 16.77. The current P/FFO Ratio is 13.05 based on a stock price of $25.02 and 2019 FFO estimate of $1.92. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $32.63. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 0.91 and 1.02. The current P/Graham Price Ratio is 0.77 based on a stock price of $25.02. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.42. The current P/B Ratio is 1.01 based on a stock price of $25.02, Book Value of $7,522M and Book Value per Share of $24.65. The current P/B Ratio is some 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 7.47%. The current dividend yield is 5.76% based on dividends of $1.44 and a stock price of $25.02. The current yield is some 23% lower than the historical median. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 7.14. The current P/S Ratio is 6.88 based on 2019 Revenue estimate of $1,110M, Revenue per Share of $3.64 and a stock price of $25.02. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is probably cheap to reasonable. Most analysts put a lot of stock in testing using FFO and these tests show the stock as cheap. However, you cannot ignore the P/S Ratio testing that says the stock price is reasonable and below the median. So, it looks like the price, in any case, is relatively good.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (6) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $27.33. This implies a total return of 14.99 based on a stock price of $25.02 and having 9.23% from capital gains and 5.76% from dividends.
See what analysts are saying about this stock on Stock Chase. Analysts seem to like this company. Nelson Smith on Motley Fool says this REIT is one of the top REITs. A Simply Wall St writer on Simply Wall Street talks about insider trading. A Lakeland Staff Writer on Lakeland Observer say the Williams Percent Range is -67 which means the stock is neither overbought or oversold, but closer to oversold. Trina Covell on Press Oracle says Royal Bank has raised this REIT’s target price.
RioCan Real Estate Investment Trust is a Canadian real estate investment trust which owns, develop, and operate Canada's portfolio of retail-focused, increasingly mixed-use properties. The REIT's property portfolio includes shopping centers and mixed-use developments, with most of its properties located in Ontario, Canada. RioCan's tenants consist of grocery stores, supermarkets, restaurants, cinemas, pharmacies, and corporates. By geography, the company operates in Canada, which generates the majority of total revenue, and in the United States. Its web site is here RioCan Real Estate.
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 Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... learn more on Wednesday, March 6, 2019 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks March 2019.... learn more on Tuesday, March 5, 2019 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.
Keep the balls rolling!! Nice posts you have given for us.
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