I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U), but I used to. 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.
In 2012 it changed its name to Granite REIT. This company because a very different company in 2012. It disconnected from Magna (but still has Magna as major tenant) and it switched the reporting and dividend currency from US$ to CDN$. It also increased the dividend for 144%.
When I was updating my spreadsheet, I noticed the stock price is higher than it was before the drop in March. It reached a high of $74.86 in February 2020, dropped to $41.12 and it now at $76.19 after hitting a high of $79.65 in August 2020.
The dividend yields are moderate. The current dividend yield is moderate (2% to 4%) at 3.79%. The 5, 10 and historical dividend yields are good 5% and 6% ranges) at 5.44%, 5.47% and 5.15%. There was a big dividend increase (of 144%) when this company was rebranded as Granite REIT in 2012. The median yields went up at that time from a 2% range to a 5% range.
The dividend growth is low. The current dividend growth is 4.95% per year over the past 5 years. The last dividend increase was in 2020 and it was for 3.90. This company has been paying dividends for 16 years. They have increased the dividend in 12 of those years and decreased them in 4 of those years. The last decrease was in 2010.
The Dividend Payout Ratios (DPR) are mostly fine. The DPR for 2019 is 36% with 5 year coverage at 38%. The DPR for CFPS is very high at 69% with 5 year coverage at 70%. The Free Cash Flow has been negative for a few years so the DPR for FCF cannot be calculated for 2019 or for 5 year coverage. Since this is a REIT, we need to looks at the DPR for Adjusted Funds from Operations (AFFO), and Funds from Operations (FFO). The DPR for AFFO for 2019 is 77%, with 5 year coverage at 75%. The DPR for FFO for 2019 is 79% with 5 year coverage at 81%.
Debt Ratios are very good. The Long Term Debt/Market Cap Ratio is good and low at 0.33 for 2019. The Liquidity Ratio for 2019 is very good at 3.78 as is the Debt Ratio for 2019 at 2.90. The Leverage and Debt/Equity Ratios for 2019 are good and low at 1.53 and 0.53.
The Total Return per year is shown below for years of 5 to 17 to the end of 2019 in CDN$. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 4.95% | 15.38% | 9.84% | 5.53% |
| 2009 | 10 | 16.07% | 25.09% | 17.75% | 7.34% |
| 2004 | 15 | 13.23% | 7.13% | 4.11% | 3.02% |
| 2002 | 17 | 11.86% | 8.49% | 5.44% | 3.05% |
The Total Return per year is shown below for years of 5 to 17 to the end of 2019 in US$. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 2.61% | 12.41% | 7.35% | 5.07% |
| 2009 | 10 | 13.63% | 22.54% | 15.23% | 7.31% |
| 2004 | 15 | 12.66% | 6.70% | 3.51% | 3.19% |
| 2002 | 17 | 11.83% | 10.30% | 6.65% | 3.65% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.08, 6.84 and 7.60. The corresponding 10 year ratios are 7.09, 8.24 and 9.38. The corresponding historical ratios are 6.89, 7.87 and 8.85. The current P/E Ratio is 10.26 based on a stock price of $76.60 and last 12 months of EPS of $7.47. This stock price testing suggests that the stock price is relatively expensive.
Because this is an REIT, we also need to look at the Price/Funds from Operations per Share Ratios. The 5 year low, median, and high median P/FFO Ratios are 13.09, 14.33 and 15.57. The corresponding 10 year ratios are 11.49, 13.31 and 15.33. The current P/FFO Ratio is 19.69 based on FFO estimate for 2020 of $3.89 and a stock price of $76.60. This stock price testing suggests that the stock price is relatively expensive.
Because this is an REIT, we also need to look at the Price/Adjusted Funds from Operations per Share Ratios. The 5 year low, median, and high median P/AFFO Ratios are 14.16, 15.49, and 16.82. The corresponding 10 year ratios are 14.16, 15.49 and 16.82. The current P/AFFO Ratio is 19.69 based on AFFO estimate for 2020 of $3.52 and a stock price of $76.60. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $73.79. The 10 year low, median, and high median Price/Graham Price Ratios are 0.72, 0.78 and 0.86. The current P/GP Ratio is 1.04 based on a stock price of $76.60. 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 1.05. The current P/B Ratio is 1.23 based on a stock price of $76.60, Book Value of $3,598M, and a Book Value per Share of $62.20. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 13.84. The current P/CF Ratio is 20.83 based on last 12 months Cash Flow of $213M, Cash Flow per Share of $3.68 and a stock price of $76.60. The current ratio is 51% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.56%. The current dividend yield is 3.79% based on dividends of $2.90 and a stock price of $76.60. The current ratio is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 5.47%. The current dividend yield is 3.79% based on dividends of $2.90 and a stock price of $76.60. The current ratio is 31% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 9.20. The current P/S Ratio is 13.69 based on a stock price of $76.60, Revenue estimate for 2020 of $250M, and Revenue per Share of $4.33. The current ratio is 49% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably relatively expensive. A lot of this testing is showing the stock price as expensive. I am going by the 10 year dividend yield testing as the company did change a lot after 2012. This is using by favourite tests of P/S Ratio and Dividend Yield. The outlier is the P/B Ratio test and the historical dividend yield test. The Book Value has grown nicely lately. Dividend yields got higher after rebranding in 2012.
Is it a good company at a reasonable price? This company certainly has done well since it was rebranded as Granite REIT. There has been better returns and higher yields. This stock is higher now than it was at the end of last year. It would seem that it is a worthwhile REIT to own. Unfortunately, it would seem to be on the expensive side at the moment.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $81.34. This implies a total return of $9.98% withy 6.19% from capital gains and 3.79% from dividends.
Analysts on Stock Chase like this stock. This stock is one of the top 10 for August 2020 picked by Motley Fool Staff . A writer on Simply Wall Street talks about FFO and REITs. A writer on Simply Wall Street talks about insider buying. The blogger The Dividend Guy calls this REIT, the Rock Solid REIT.
Granite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. The vast majority of the company's assets are logistics and distribution warehouses and multipurpose buildings split fairly evenly amongst Canadian, Austrian, and U.S. locations. Its web site is here Granite REIT.
The last stock I wrote about was about was Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more. The next stock I will write about will be Le Chateau Inc (TSX-CTU, OTC-LCUAF) ... learn more on Monday, September 28, 2020 around 5 pm.
Also, on my book blog I have put a review of the book Heart, Breath, Mind by Leah Lagos learn more...
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