I do not own this stock of Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF). A member of one of my investment club suggested this stock.
When I was updating my spreadsheet, I noticed that distribution tax is changing from a Capital Dividend to Return of Capital in 2019. For more information on Capital Dividends in Canada see site at Welch LLP.
The dividend yields are currently moderate with dividend growth moderate but inconsistent. The current dividend yield is moderate (2% to 4%) range at 2.00%. The 5 year median dividend yield is moderate at 4.76%. The 10 year median dividend yield is good (5% to 6% ranges) at 6.38%. The historical median dividend yield is high (7% or above) at 7.76%. The company started out as an Income Trust and these sorts of companies had very high dividend yields. The dividend growth over the past 5 years is moderate (8% to 14% ranges) at 8.6% per year. However, dividend growth has been inconsistent. There was no dividend increase in 2020.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2019 is 67% with 5 year coverage at 80%. However, analyst expect the DPR for EPS to drop and be around 28% in 2020. The DPR for CFPS for 2019 is 28% with 5 year coverage at 31%. The DPR for Free Cash Flow for 2019 is 41% with 5 year coverage at 52%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is very low and good at 0.02. The Liquidity Ratio for 2019 is 1.59. It has dropped to 1.27 for 2020, but if you add in cash flow after dividend it is 1.64. The Debt Ratio for 2019 is 2.04. This also dropped in 2020 and it is currently at 1.76. However, this is still a good ratio. The Leverage and Debt/Equity Ratio
The Total Return per year is shown below for years of 5 to 15 to the end of 2019. 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 | 8.60% | 33.53% | 27.96% | 5.57% |
| 2009 | 10 | 16.36% | 26.92% | 20.35% | 6.57% |
| 2004 | 15 | 4.73% | 15.35% | 10.01% | 5.34% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.46, 17.92 and 20.37. The corresponding 10 year Ratios are 13.98, 16.47 and 19.07. The corresponding historical ratios are 13.69, 15.82 and 18.19. The current P/E Ratio is 15.81 based on a stock price $66.00 and EPS estimate for 2020 of $4.78. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $36.89. The 10 year low, median, and high median Price/Graham Price Ratios are 0.96, 1.12 and 1.28. The current P/GP Ratio is 1.79 based on a stock price of $66.00. 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 1.65. The current P/B Ratio is 5.22 based on a stock price of $66.00, Book Value of $142M and Book Value per Share of $12.85. The current P/B Ratio is 215% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.42. The current P/CF Ratio is 10.92 based on last 12 month Cash Flow of $67.9M, Cash Flow per Share of $6.05 and a stock price of $66.00. The current ratio is 30% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive
I get an historical median dividend yield of 7.76%. The current dividend yield is 2.00% based on dividends of $1.32 and a stock price of $66.00. The current dividend yield is 74% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.38%. The current dividend yield is 2.00% based on dividends of $1.32 and a stock price of $66.00. The current dividend yield is 69% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 5 year median dividend yield of 4.76%. The current dividend yield is 2.00% based on dividends of $1.32 and a stock price of $66.00. The current dividend yield is 58% below the 5 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 0.65. The current P/S Ratio is 1.59 based on Revenue estimate for 2020 of $467M, Revenue per Share of $41.59 and a stock price of $66.00. The current ratio is 143% above the 10 year median 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 expensive. All the dividend yield tests say this and it is confirmed by the P/S Ratio test. (As the stock price goes up, the dividend yield goes down. The stock price is up some 44% this year.) Basically, the only test to show the stock price is reasonable is the P/E Ratio test. Analysts expect that the EPS will be up some 143% this year to $4.78. The last 12 months EPS is low at $2.93 and increase of 49%.
Is it a good company at a reasonable price? This is an interesting Dividend Growth Stock. It has rising Revenue, Earnings and Cash Flow. I think that it is a good company. The problem is that it would seem to be expensive currently.
When I look at analysts’ recommendations, I find one Buy (1) recommendation. The consensus would be a Buy. The 12 month stock price consensus is $86.00. This implies a total return of 32.30% with 2% from dividends and 30.30% from capital gains based on a stock price of $66.00.
Analysts like this stock on Stock Chase. Adam Othman on Motley Fool likes the company but feels it is currently overpriced. A writer on Simply Wall Street says the fair market price for this stock is $60.59 CDN$. A writer on Simply Wall Street says the dividend is well covered and the company is growing its earnings. This makes the stock attractive. The Blogger Dividend Girl says this stock was her best Canadian stock investment.
Richards Packaging Income Fund is involved in packaging distribution businesses. The company principally distributes plastic and glass containers and associated closures. It is used in packaging for cosmetics, healthcare, food, beverage, and other products. Geographically, it derives a majority of revenue from the United States. Its web site is here Richards Packaging Income Fund.
The last stock I wrote about was about was Magna International Inc (TSX-MG, NYSE-MGA) ... learn more. The next stock I will write about will be Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF) ... learn more on Tuesday, December 23, 2020 around 5 pm. Tomorrow on my other blog I will write about Barrick Gold.... learn more on Tuesday, December 22, 2020 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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