Sound bite for Twitter and StockTwits is: Dividend Paying Healthcare. The stock price is probably reasonable to expensive. A company that has lowered the dividends as much as raised them is not a good dividend stock to buy. I do not like their debt ratios. See my spreadsheet on Chartwell Retirement Residences.
I do not own this stock of Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF). I saw this stock on a dividend investing blog and looked it up on Stock Chase.
When I was updating my spreadsheet, I noticed that this company does not have a great track record on paying dividends. Dividends have been decreased as much as increased and they have been flat most years. Interestingly, the tax treatment of the dividends for distributions are currently very good. 2018 was the first year when part of the distributions was taxable and only 3% of the distributions were.
The current dividend yield is in the moderate range (2% to 4% ranges), but for most of this stock’s life the dividend yield was much higher. The current dividend yield is 4.22%. The 5, 10 and historical dividend yields are 3.99%, 4.20% and 6.78%. From when dividends were started in 2004, dividend were only decreased. Dividend increases started in 2015 at very low rates. The most recent increase was in 2019 and it was for 2%.
The Dividend Payout Ratios are fine for FFO and AFFO. This company is sort of a REIT, but not really and it is classified as Health Care. Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) are provided. The DPR for FFO for 2018 is 65% with the 5 year coverage is 64%. The DPR for AFFO for 2018 is 69% with 5 year coverage at 70%.
The Dividend Payout Ratios in other calculations are not so fine. The DPR for CFPS is high and for FCF is over 100%. They have never come close to covering their dividends with earnings. The DPR for CFPS for 2018 is 47% with 5 year coverage at 46%. The DPR for FCF for 2018 is 254% with 5 year coverage at 194%.
I would like to see better Debt Ratios. The Long Term Debt/Market Cap is 0.69 and this one is fine. The Liquidity Ratio for 2018 is 0.18. The Liquidity Ratio just gets over 100% at 105% if you add back in cash flow after distributions and the current portion of the long term debt. There is no safety margin. The Debt Ratio is low but fine at 1.39 with a 5 year median at 1.39 also. The Leverage and Debt/Equity Ratios for 2018 are 3.56 and 2.56 with 5 year median ratios at 3.56 and 2.56 also. These are a little high.
The Total Return per year is shown below for years of 5 to 15 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 1.61% | 12.18% | 7.10% | 5.07% |
| 2008 | 10 | -3.34% | 17.79% | 10.06% | 7.73% |
| 2003 | 15 | -4.24% | 6.75% | 0.73% | 6.02% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 156.36, 174.38 and 192.40. The 10 year corresponding ratios are 32.25, 35.77 and 39.29. The historical ratios are all negative. There is nothing I can do with this.
The 5 year low, median, and high median Price/FFO Ratios are 13.28, 15.38 and 17.47. The corresponding 10 year ratios are 11.98, 13.42 and 15.13. The current P/FFO Ratio is 15.37 based on 2019 FFO estimate of $0.92 and a stock price of $14.14. This stock price testing suggests that the stock price is relatively expensive.
Since this is near the end of the year, we should look at the P/FFO Ratio for 2020. The P/FFO ratio for 2020 is 14.73 based on 2020 AFFO estimate of $0.96 and a stock price of $14.14. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 5 year low, median, and high median Price/AFFO Ratios are 14.35, 16.46 and 18.87. The corresponding 10 year ratios are 13.26, 14.86 and 16.45. The current P/AFFO Ratio is 16.64 based on 2019 AFFO estimate of $0.85. This stock price testing suggests that the stock price is relatively expensive.
Since this is near the end of the year, we should look at the P/AFFO Ratio for 2020. The P/AFFO ratio for 2020 is 15.71 based on 2020 AFFO estimate of $0.90 and a stock price of $14.14. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $2.88. The 6 year low, median, and high median Price/Graham Price Ratios are 4.73, 5.25 and 5.77. I do not have a good history for the Graham Price because of all the years of earnings losses. The current P/GP Ratio is 4.90 based on a stock price of $14.14. This stock price testing suggests that the stock price is relatively expensive.
If I do the Graham Price based on FFO, I get 10 year low, median, and high median Price/Graham Price Ratios are 1.25, 1.40 and 1.46. The current P/GP Ratio is 1.53 based on a stock price of $14.14. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 3.04. The current P/B Ratio is 3.44 based on a Book Value of $873M, Book Value per Share of $4.11 and a stock price of $14.14. The current ratio is 13% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 6.76%. The current dividend yield is 4.22% based on dividends of $0.60 and a stock price of $14.14. The current yield is 38% lower than the historical median. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 5.20. With a current dividend yield of 4.22%, the 10 year median yield is 19% higher. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.08. The current P/S Ratio is 3.28 based on 2019 Revenue estimate of $917M, Revenue per Share of $4.31 and a stock price of $14.14. The current ratio is 58% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive. Since analysts estimate for Revenue in 2020 is lower than for 2019, we cannot get a better ratio for P/S using 2020 estimates.
Results of stock price testing is that the stock price is probably reasonable to expensive. The best test is the P/S Ratio testing. A problem with the dividend yield testing is that the dividends have mostly been declining. The P/B Ratio testing is showing the stock price is reasonable but above the median as is the P/AFFO Ratio and the P/FFO Ratio test and these for 2020 is showing the stock price above the median.
Is it a good company at a reasonable price? Because people are talking about buy stock that cater to seniors, I took a look at both this company and Sienna Senior Living. I was looking for stocks to buy. However, I decided not to invest in either because I did not like their debt ratios. I do not think that the current price is reasonable.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (3). The consensus would be a Buy. The 12 month stock price is 15.89. This implies a total return 16.60% with 12.38% from capital gains and 4.22% from dividends based on a current stock price of $14.14.
See what analysts are saying on Stock Chase. They think that is currently a Buy. Cindy Dye on Motley Fool thinks this company is well suited to take advantage of the coming boom of aging seniors . A writer on Simply Wall Street thinks this company is too highly leveraged. A writer on Simply Wall Street thinks this company is overvalued.
Chartwell Retirement Residences is an unincorporated open-ended trust. The company is engaged in ownership, operation and management of retirement and long-term care communities in Canada. It operates its retirement and long-term care facilities separately. Its web site is here Chartwell Retirement Residences.
The last stock I wrote about was about was Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF) ... learn more. The next stock I will write about will Sienna Senior Living Inc (TSX-SIA, OTC- LWSCF) ... learn more today.
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.
No comments:
Post a Comment