Wednesday, March 31, 2021

BCE Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. Stock price is reasonable and below the median. Dividend Payout Ratios could be improved. The dividend yield is good, with low dividend growth. I have done well with this stock over the years. See my spreadsheet on BCE Inc.

I own this stock of BCE Inc (TSX-BCE, NYSE-BCE). I bought this stock in 1982 and have held it ever since. Since I bought it both Nortel and Bell Aliant were spin off. The problem with BCE's spinning off part of the company was that I ended up with an odd number of shares. It is annoying.

When I was updating my spreadsheet, I noticed that I have done well in this stock. My total return to the end of February 2021 is 10.02% for this stock that I first bought in 1982, but have only been tracking in Quicken since 1987. When I calculate my total return, I have to consider both Bell Aliant and Nortel which were both spun off by this company.

The dividend yields are good with dividend growth low. The dividend yields are good (5% to 6% ranges) with the current dividend yield at 6.16%. The 5, 10 and historical dividend yields are also good at 5.29%, 5.17% and 5.14% respectively. The dividend growth is low (under 8%) with a 5 year increase of 5.08% per year. The last increase was for 5.1% and it was in 2021.

The Dividend Payout Ratios (DPR) could be improved. The DPR for EPS was 119% in 2020 with a 5 year coverage of 95%. The DPR for CFPS for 2020 was 32% with 5 year coverage at also 32%. The DPR for Free Cash Flow was 89% with 5 year coverage at 79%. Some site agree sometimes on what FCF is.

Debt Ratios are fine. The Long Term Debt/Market Cap ratio for 2021 is fine at 0.49. They can pay off the long term debt in 3 years with cash flow and that is also fine. The Liquidity Ratio for 2021 is 0.69 and that is low. If you add in cash flow after dividends it is 1.27 and still low as I like this to be at least 1.50. The Debt Ratio is good at 1.54. The Leverage and Debt/Equity Ratios are 2.84 and 1.84 and these are also fine.

The Total Return per year is shown below for years of 5 to 38 to the end of 2020. 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.
2015 5 5.08% 5.88% 0.36% 5.52%
2010 10 6.62% 10.50% 4.41% 6.08%
2005 15 6.28% 10.04% 4.60% 5.44%
2000 20 5.17% 5.77% 1.79% 3.99%
1995 25 8.60% 8.98% 3.91% 5.06%
1990 30 7.37% 9.25% 3.87% 5.38%
1985 35 6.60% 8.05% 3.15% 4.90%
1982 38 6.50% 13.27% 4.92% 8.34%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.41, 17.95 and 19.48. The corresponding 10 year ratios are 16.21, 17.65 and 19.19. The corresponding historical ratios are 15.28, 17.51 and 18.14. The current P/E Ratio is 18.34 based on a stock price of $56.85 and EPS estimate for 2021 of $3.10. The current P/E Ratio is between the median and high median ratios of 17.65 and 19.19. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $36.19. The 10 year low, median, and high median Price/Graham Price Ratios are 1.46, 1.63 and 1.77. The current P/GP Ratio is 1.57 based on a stock price of $56.85. The current ratio is between low median and median ratios of 1.46 and 1.63. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 3.13. The current P/B Ratio is 3.03 based on a stock price of $56.85, Book Value of $16,986M and Book Value per Share of $18.78. The current ratio is 3% below the 10 year median ratio of 3.13. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 6.76. The current P/CF Ratio is 6.53 based on Cash Flow per Share estimate for 20201 of $8.70, Cash Flow of $7,868M and a stock price of $56.85. The current ratio is 3% below the 10 year median ratio of 6.76. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 5.14%. The current dividend yield is 6.16% based on dividends of $3.50 and a stock price of $56.85. The current dividend yield is 20% above the historical median dividend yield of $5.14%. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 5.17%. The current dividend yield is 6.16% based on dividends of $3.50 and a stock price of $56.85. The current dividend yield is 19% above the historical median dividend yield of $5.14%. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.18. The current P/S Ratio is 2.17 based on a stock price of $56.85, Revenue estimate for 2021 of $23,362M, and Revenue per Share of $26.15. The current P/S Ratio is .3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Results of stock price testing is that the stock price is probably reasonable. Both the Dividend Yield tests say the stock price is cheap, but this is not confirmed by the P/S Ratio test that says it is reasonable and below the median.

Is it a good company at a reasonable price? I own this stock and I intend to keep it. I have made a reasonable return over the 33 years I have held this stock (10.02% total return per year). It is a dividend growth stock. For most of the years noted above, total return has been 8% and above. The stock price would be reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (9) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $60.32. This implies a total return of 12.26% with 6.10% from capital gains and 6.16% from dividends.

Analysts like this stock on Stock Chase. Either it is a buy or a top pick. Rajiv Nanjapla on Motley Fool lists this stock as one of that is currently safe to buy. The executive summary on Simply Wall Street give this stock 3 stars out of 5 and list three risks. A writer on Simply Wall Street points out that BCE’s dividend is not well covered by EPS. The Blogger Dividend Earner did a review of this stock in January of this year.

BCE is both a wireless and Internet service provider, offering wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with its roughly 10 million customers constituting about 30% of the market. Additionally, BCE has a media segment, which holds television, radio, and digital media assets. Its web site is here BCE Inc.

The last stock I wrote about was about was AltaGas Ltd (TSX-ALA, OTC-ATGFF) ... learn more. The next stock I will write about will be Melcor Developments Inc (TSX-MRD, OTC-MODVF) ... learn more on Friday, April 2, 2021 around 5 pm. Tomorrow on my other blog I will write about Value and Growth Investing .... learn more on Thursday, April 1, 2021 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.

Monday, March 29, 2021

AltaGas Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is relatively cheap. This is again a dividend growth stock. I have not done well with this stock with a total return of just 6.9% per year, but I expect that in the future it will hit the 8% total return that I like. Analysts expect the DPRs to improve. See my spreadsheet on AltaGas Ltd.

I own this stock of AltaGas Ltd (TSX-ALA, OTC-ATGFF). When I bought this stock in 2009 it was on many dividend growth stock lists. In 2009, I saw that this stock also had good growth in Revenues, Earnings, Dividends, and Stock Prices over the last 5 and 10 years. The stock had a fairly strong balance sheet. I took a small position in this stock, and planned to wait and see how things go with this stock before buying more. I bought more in 2010 and 2012.

When I was updating my spreadsheet, I noticed I have not done very well with this stock. I have had it for nearly 12 years and my total return is 6.90% per year with a capital loss of 1.39% per year and dividends of 8.29% per year. The problem is the shares I bought in 2012 are at a price higher than today’s price. The company got into some problems in 2017 and the stock price fell.

The dividend yields are moderate with dividend growth as restarted. The current dividend yield is moderate (2% to 4% ranges) at 4.70%. The 5, 10 and historical dividend yields are good (5% to 6% ranges) at 6.41%, 5.29% and 6.09%. The dividends fell over 50% in 2019. In 2021, they increased the dividends by 4%. This company used to be an income trust. They transition for old income trust companies into corporations have been tough. The problem being that income trust could pay out more in dividends than corporations can. A lot of companies have had a hard time adjusting. I have data for 20 years and they increased the dividend 15 times and decreased them 3 times.

The Dividend Payout Ratios (DPR) are expected to improve. The DPR for EPS for 2020 was 55% with 5 year coverage at 240%. Analysts expect the DPRs to improve, especially the 5 year coverage one. The DPR for CFPS for 2020 was 27% with 5 year coverage at 58%. The DPR for Free Cash Flow cannot be calculated for 2020 and for 5 year coverage because of negative FCF. Analysts expect FCF to turn positive this year.

Debt Ratios could be improved. Debt is high. The Long Term Debt/Market Cap Ratio is too high at 1.46. It is low currently at 1.28 because of increase in Market Cap. The Liquidity Ratio is for 2020 is 0.96. If you add in Cash Flow after dividends, it is only 1.15 and if you add back the current portion of the debt it is still low at 1.34. The Debt Ratio is fine at 1.55. The Leverage and Debt/Equity Ratios for 2020 is 2.81 and 1.81 and they are fine.

The Total Return per year is shown below for years of 5 to 21 to the end of 2020. 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.
2015 5 -12.46% -3.13% -9.54% 6.41%
2010 10 -5.39% 6.34% -1.47% 7.81%
2005 15 -4.24% 4.73% -2.64% 7.37%
2000 20 10.26% 21.95% 6.56% 15.39%
1999 21 10.25% 17.81% 5.57% 12.24%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.51, 9.24 and 12.97. The corresponding 10 year ratios are 24.24, 28.48 and 32.71. The corresponding historical ratios are 12.13, 15.22 and 18.41. The current P/E Ratio is 13.56 based on based on a stock price of $21.29 and EPS estimate for 2021 of $1.57. The current P/E Ratio is below the 10 year low ratio of 24.24. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $26.89. The 10 year low, median, and high median Price/Graham Price Ratios are 1.33, 1.62 and 1.86. The current P/GP Ratio is 0.79 based on a stock price of $21.29. This ratio is below the 10 year low median ratio of 1.33. 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 1.71. The current P/B Ratio is 1.04 based on a stock price of $21.29, Book Value of $5,722M, and Book Value per Share of 20.47. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 11.30. The current P/CF Ratio is 5.72 based on a stock price of $21.29, Cash Flow per Share estimate for 2021 of $3.72 and Cash Flow of $1,040M. The current ratio is 49% 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 6.09%. The current dividend yield is 4.70% based on dividends of $1.00 and a stock price of $21.29. The current dividend yield is 23% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that this company used to be an income trust, which can pay higher dividends than a corporation and the dividends were cut by 56% in 2019.

I get an historical median dividend yield of 5.29%. The current dividend yield is 4.70% based on dividends of $1.00 and a stock price of $21.29. The current dividend yield is 11% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. The problem with this test is that this company cut the dividends by 56% in 2019.

The 10 year median Price/Sales (Revenue) Ratio is 2.17. The current P/S Ratio is 1.17 based on a stock price of $21.29, Revenue estimate for 2021 of $5,773M and Revenue per Share of $20.66. The current ratio is 46% below the 10 year median ratio 2.17. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. Unfortunately, there are problems with dividend yield tests and so these are not really usable. The P/S Ratio test shows the stock price as relatively cheap as does all the other tests.

Is it a good company at a reasonable price? I own this stock and I plan to keep it even though it has recently gone through a few tough years. It is repositioning itself as a dividend growth stock with a dividend increase in 2021. They plan to continue to increase their dividends. So, currently I think it is a good company at a reasonable price.

When I look at analysts’ recommendations, I find Strong Buy (6), Buy (8) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $23.33. This implies a total return of 14.28% based on a stock price of $21.29.

Analysts on Stock Chase have quite varying views on this stock, but most are positive. Ambrose O'Callaghan on Motley Fool thinks this is a buy and hold stock for Millennials. Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and list 4 risks. A writer on Simply Wall Street thinks this stock is trading at a fair price, so there is not much current room for the stock price to grow. The company gives an update on its future on Newswire.

AltaGas Ltd owns and operates a diversified basket of energy infrastructure businesses. Business is conducted through four segments: Midstream, power, utilities and corporate. Revenue is derived from customers in both Canada and the United States, with United States customers contributing the most. Its web site is here AltaGas Ltd.

The last stock I wrote about was about was TC Energy Corp (TSX-TRP, NYSE-TRP) ... learn more. The next stock I will write about will be BCE Inc (TSX-BCE, NYSE-BCE) ... learn more on Wednesday, March 31, 2021 around 5 pm. Tomorrow on my other blog I will write about Preferred Shares.... learn more on March 30, 2021 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.

Friday, March 26, 2021

TC Energy Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is reasonable and it may even be on the cheap side. I have done well with this stock. DPR could stand improvement. Debt Ratios could also stand to be improved. See my spreadsheet on TC Energy Corp.

I own this stock of TC Energy Corp (TSX-TRP, NYSE-TRP). When I bought this stock, it was on Mike Higgs' Canadian Dividend Growth Stock list and the other dividend lists that I followed.

When I was updating my spreadsheet, I noticed that I have done well on this stock, but not as well as last year. My total return February 2021 is 9.56% per year. However, this time last year I had a total return of 11.28% per year. I also bought this stock over a few years, so some of the pieces are doing as well as others. However, it just points to the fact it is good to buy a stock over time rather than all at one time.

The dividend yields are currently good with dividend growth moving lower. The current dividend is good (5% and 6% ranges) at 5.78%. The 5, 10 and historical median dividend yield are lower and moderate (2% to 4% ranges) at 4.94%, 4.10% and 4.30%. The last dividend increase was low (under 8%) at 7.41% in 2021. The last 5 years the dividend increases were at 9.3% per year, but this is the highest they have ever been as in other years, the dividend increases were all under 8% per year.

The Dividend Payout Ratios (DPR) need improving. The DPR for EPS for 2020 is 67% with 5 year coverage at 82%. The DPR for EPS has been rather too high since 2015 and is now moving lower. The DPR for CFPS for 2020 is 48% with 5 year coverage also at 48%. This is high also as I prefer this ratio to be 40% or less. For this stock I also have an DPR for an Adjusted EPS and the ratio is 76% with 5 year coverage at 75%. The DPR for Adjusted Funds from Operations (AFFO) for 2020 is 41% with 5 year coverage at 44%. The DPR for Free Cash Flow cannot be calculated for either 2020 or for the last 5 years as FCF has been negative. Also, sites do not agree on FCF, they do agree it has been negative.

Debt Ratios are acceptable, but not good. Long Term Debt/Market Cap Ratio for 2020 is 0.70. The Asset/Current Liabilities Ratio is 8.37, so this is good coverage. The Long Term Debt can be paid off in 4.9 years with cash flow. 3 years is better, but this is ok. The Liquidity Ratio is very low at 0.43. If we add in cash after dividends and the current portion of the long term debt, it becomes 1.07. There is coverage, but no safety margin. The Debt Ratio for 2020 is 1.49. I like the last two ratios to be 1.50 and above. The Leverage and Debt/Equity Ratios for 2020 are 3.03 and 2.03 and so ok.

The Total Return per year is shown below for years of 5 to 32 to the end of 2020. 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.
2015 5 9.28% 8.36% 2.75% 5.61%
2010 10 7.24% 8.17% 3.14% 5.03%
2005 15 6.60% 6.70% 2.33% 4.38%
2000 20 7.14% 11.78% 5.95% 5.84%
1995 25 4.65% 9.10% 4.14% 4.96%
1990 30 5.23% 8.48% 3.78% 4.70%
1988 32 4.94% 9.30% 4.23% 5.07%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.34, 13.95 and 16.48. The corresponding 10 year ratios are 17.07, 18.37 and 19.66. The corresponding historical ratios are 12.30, 13.95 and 16.03. The current P/E Ratio is 14.72 based on $58.72 and EPS estimate for 2021 of $4.09. The current ratio of 14.72 is below the 10 year low median ratio of 17.07. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $51.83. The 10 year low, median, and high median Price/Graham Price Ratios are 1.23, 1.38 and 1.46. The current P/GP Ratio is 1.16 based on a stock price of $58.72. The current ratio of 1.16 is lower than the 10 year low median ratio of 1.23. 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 2.11. The current P/B Ratio is 2.06 based on a Book Value of $27,445M, Book Value per Share of $29.19 and a stock price of $58.72. The current ratio of 2.06 is 2.3% below the 10 year median ratio of 2.11. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 8.62. The current P/CF Ratio is 8.11 based on Cash Flow per Share estimate for 2021 of $7.42, Cash Flow of $6,975M and a stock price of $58.72. The current ratio of 8.11 is 5.8% below the 10 year median ratio of 8.62. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 4.30%. The current dividend yield is 5.78% based on a stock price of $58.72 and dividends of $3.48. The current dividend yield of 5.78% is 34% above the historical median dividend yield of 4.30%. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 4.10%. The current dividend yield is 5.78% based on a stock price of $58.72 and dividends of $3.48. The current dividend yield of 5.78% is 41% above the 10 year median dividend yield of 4.10%. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 3.80. The current P/S Ratio is 4.00 based on Revenue estimate for 2021 of $14,149, Revenue per Share of $15.05 and a stock price of $58.72. The current ratio of 4.00 is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Results of stock price testing is that the stock price is probably reasonable and maybe cheap. The dividend yield tests are showing the stock price as cheap, but the P/S Ratio test does not confirm that and suggests that the stock price is reasonable and a bit above the median.

Is it a good company at a reasonable price? I own this stock and I plan to continue to hold it. I think that it is still a long term investment. It is a dividend growth stock. I also think that the stock price is reasonable at this time.

When I look at analysts’ recommendations, I find Strong Buy (7), Buy (11) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $68.32. This implies a total return of 19.27% with 13.49% from capital gains and 5.78% from dividends based on a current stock price of $60.20.

Analysts on Stock Chase think this stock is a buy. Sneha Nahata on Motley Fool says the four best stocks to buy now are TC Energy Corp, Fortis Inc, Enbridge Corp, and Canadian Utilities. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 2 risk factors. A writer on Simply Wall Street thinks the dividends are not well covered by EPS and Cash Flow. They also do not like the fact that the company has a negative Free Cash Flow. .

TC Energy operates as an energy infrastructure company, consisting of pipeline and power generation assets in Canada, the United States, and Mexico. Its web site is here TC Energy Corp.

The last stock I wrote about was about was TransAlta Corp (TSX-TA, NSYE-TAC) ... learn more. The next stock I will write about will be AltaGas Ltd (TSX-ALA, OTC-ATGFF) ... learn more on Monday, March 29, 2021 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.

Wednesday, March 24, 2021

TransAlta Corp

Sound bite for Twitter and StockTwits is: Dividend Paying Utility. The stock price seems relatively expensive at present. It may become a dividend growth stock, but it has a very checkered past in regards to dividends with dividends mostly flat. They have a lot of debt. Some Debt Ratios are fine. See my spreadsheet on TransAlta Corp.

I do not own this stock of TransAlta Corp (TSX-TA, NSYE-TAC). I bought this stock in 1987. It was a utility stock and utility stocks were considered to be good investments. I sold some in 2000 as the stock price was below what I had paid for it. By September 2019, I had finally had enough and saw no hope in this stock doing better. I noticed that MPL Communications had given up hope in this stock in 2014.

When I was updating my spreadsheet, I noticed 2020 is the first year since 2010 when dividends have not been flat or declining. Dividend increase was for 6.25%. They increased the dividends again in 2021 by 5.88%. This is good news for shareholders.

I noticed that I held this stock from 1987 to 2019, some 32 years. I earned a total return of 6.12% per year with a capital loss of 2.98% per year and dividends of 9.10% per year. I just gave up on this stock in 2019 and would never buy it again. If I had held it to this year, February 2021, I would have made a capital gain of 1.24% per year. This story shows the benefit of investing in dividend paying stock, as you often make something. However, I probably held it too long, but in the beginning, it was making 7 or 8% per year and I like stocks that at least make 8% per year total return.

The dividend yields are low with dividend growth perhaps restarting. The current dividend yield is low (below 2%) at 1.61%. This stock used to have a higher yield. The 5 year median dividend yield is moderate (2% to 4% ranges) at 2.10%. The 10 and historical median dividend yields are good (5% and 6% ranges) at 5.37% and 5.51%. In 2020 they did a dividend increase and the first since 2009. The dividend increase was low (below 8%) at 6.25%. They did another dividend increase in 2021 and it was also low at 5.88%. I have data for 33 years and in that time, there has been 8 dividend increases and 4 decreases. In the remaining years, dividends were flat.

The Dividend Payout Ratios (DPR) are good and low expect for EPS. I cannot calculate the DPR for EPS for 2020 or for the last 5 years as they have paid out more in dividends than they earned in EPS. There have been a number of EPS losses over the last 5 and 10 years. They have had 6 years of EPS losses in the past 10 years. The DPR for CFPS for 2020 is 7.4% with 5 year coverage at 7.8%. I have data on Funds from Operations and the DPR for FFO for 2020 is 6.8% with 5 year coverage at 6.9%. The DPR for Adjusted Funds from Operations (AFFO) for 2020 is 12.9% with 5 year coverage at 14%. The DPR for Free Cash Flow for 2020 is 23.3% with 5 year coverage at 14.5%.

Debt Ratios are mixed and the stock market does not value the stock above the long term debt. The Long Term Debt/Market Cap Ratio for 2020 is far too high at 1.35. It means this debt is higher than the company’s market cap when it is over 1.00. The current ratio is lower at 1.17, but still too high. The Assets/Current Liability Ratio is good at 10.42. This means that assets cover current liabilities by over 10 times. The Liquidity Ratio for 2020 is 2.03. The Debt Ratio for 2020 is 1.54. The Leverage and Debt/Equity Ratios for 2020 2.84 and 1.84 respectively.

The Total Return per year is shown below for years of 5 to 33 to the end of 2020. 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.
2015 5 -25.30% 17.68% 14.52% 3.17%
2010 10 -17.59% -3.79% -7.53% 3.74%
2005 15 -11.23% -1.79% -6.24% 4.45%
2000 20 -8.55% 1.37% -4.03% 5.40%
1995 25 -6.82% 5.70% -1.64% 7.34%
1990 30 -5.72% 7.90% -0.68% 8.59%
1987 33 -5.03% 6.31% -1.19% 7.51%


The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 10 year ratios are also negative. The corresponding historical ratios are 14.90, 15.26 and 21.19. The current P/E Ratio is negative as is the P/E Ratio for 2022. The P/E Ratio for 2023 is 48.65 based on a stock price of $11.19 and 2023 EPS estimate of $0.23. There really is much we can test on here. The P/E Ratio for 2023 is very high and this is because the EPS is quite low.

There is Adjusted Fund from Operations data for this stock. The 5 year low, median, and high median Price/AFFO Ratio per share are 3.63, 5.43 and 7.25. The corresponding 9 year ratios are 4.70, 7.15 and 8.60. The current P/AFFO Ratio is 8.61. This is just above the 9 year high median ratio of 8.60. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $4.51, but this is just a guess as there are lots of years of EPS losses. The 10 year low, median, and high median Price/Graham Price Ratios are 1.01, 1.18 and 1.37. The current P/GP Ratio is 2.48 based on a stock price of $11.19. The current ratio of 2.48 is above the 10 year high median ratio of 1.37. 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 1.30. The current P/B Ratio is 2.22 based on a Book Value of $1,357, Book Value per Share of $5.03 and a stock price of 11.19. The current ratio is 71% 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 3.89. The current P/CF Ratio is 4.46 based on Cash Flow per Share estimate for 2021 of $2.51, Cash Flow of $677M and a stock price of $11.19. The current ratio is 15% above the 10 year median 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 5.51%. The current dividend yield is 1.61% based on dividends of $0.18 and a stock price of $11.19. The current dividend yield is 71% 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 5.37%. The current dividend yield is 1.61% based on dividends of $0.18 and a stock price of $11.19. The current dividend yield is 70% 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 1.05. The current P/S Ratio is 1.48 based on Revenue estimate for 2021 of $2,034M, Revenue per Share of $7.54 and a stock price of $11.19. The current ratio is 41% 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. The actual price is not that high for this stock if you look at price before 2011. However, it has had a good run lately. It went up 66% in 2019 and another 16% so far this year. Another problem is that future estimates are rather low. Analysts do not expect great things from this company in the near future. If you buy this stock, you even do not get a really good dividend yield until it fully recovers.

Is it a good company at a reasonable price? I do not regret selling this stock. If I had retained it, I would at least now have a capital gain, but of just 1.24% per year. I would have a total return of some 10% per year because of dividends, but dividends in the past. Dividend yield is a lot lower since I sold my shares and a lot lower than most of the years I held this stock.

When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5), Hold (2) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $12.96. This implies a total return of 17.43% with 15.82% from capital gains and 1.61% from dividends.

Analysts on Stock Chase seem to like this stock and think it is a buy. Andrew Walker on Motley Fool thinks this stock is currently a good deal. People who bought at the low in 2016 have done very well. The executive summary on Simply Wall Street gives this company 3 stars out of 5 and list one risk item. A writer on Simply Wall Street talks about insider buying. A writer on Simply Wall Street is worried about the level of debt in this company. The company announces retirement of their CEO Dawn Farrell.

TransAlta is an independent power producer based in Alberta, Canada. The company owns more than 70 power plants in Canada, the Western United States, and Australia. TransAlta's net generating capacity is approximately 50% coal-fired and 20% natural gas-fired. The remaining 30% consists primarily of hydroelectric plants and wind energy farms. Its web site is here TransAlta Corp.

The last stock I wrote about was about was Enbridge Inc (TSX-ENB, NYSE-ENB) ... learn more. The next stock I will write about will be TC Energy Corp (TSX-TRP, NYSE-TRP) ... learn more on Friday, March 26, 2021 around 5 pm. Tomorrow on my other blog I will write about Canadian Utilities.... learn more on Thursday, March 25, 2021 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.

Monday, March 22, 2021

Enbridge Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is probably reasonable. There are risks as the debt level is high and the Dividend Payout Ratios need to be improved. Both the CEO and CFO has bought stock in the past year. See my spreadsheet on Enbridge Inc.

I own this stock of Enbridge Inc (TSX-ENB, NYSE-ENB). I first bought this stock in 2005 and then bought more in 2008 and 2009. This stock was on the Dividend Achievers, the Dividend Aristocrats list and also on Mike Higgs’ list of Canadian Dividend Growth stocks. Enbridge is considered to be a low risk stock.

When I was updating my spreadsheet, I noticed that I have done well on this stock also. I bought shares in 2005 and although it is worth less than at this time last year, but total return if 11.69% per year with 6.73% from capital gains and 4.96% from dividends.

Another thing to note is this company has a high debt level. Most of the debt ratios are fine, except for the Liquidity Ratio. For 2020 it is still under 1.00 at 0.96 even with cash flow after dividends and current long term debt added back. Current, in this calculation, the same way with cash flow after dividends and current long term debt added back, it is 1.03. When this ratio is under 1.00, it means that current assets cannot cover current debt.

The dividend yields are currently high with dividend growth currently going low. The current dividend yield is high (7% and higher) at 7.53%. The 5 year median dividend yield is good (5% and 6% ranges) at 5.61%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 3.85% and 3.50%. The dividend growth used to be moderate (8% to 14% ranges) with the 5 year dividend growth at 11.7% per year. However, the latest dividend increase was low at 3.09%. There are C19 concerns.

The Dividend Payout Ratios (DPR) needs improving. The DPR for EPS for 2020 was 219% with 5 year coverage at 147%. It has been higher than 100% since 2012. Analysts see this number improving over the short term but not below 100%. The DPR for CFPS for 2020 is 79% with 5 year coverage at 63%. It has been higher than 40% since 2017. A good ratio is 40% or less for CFPS. I have an Adjusted EPS and the DPR for Adjusted EPS for 2020 is 134% with 5 year coverage at 112%. I also have the DPR for Adjusted Funds from Operations (AFFO) and the DPR for AFFO for 2020 is 69% with 5 year coverage at 63%. The DPR for Free Cash Flow for 2020 is 158% with 5 year coverage at 236%.

Debt Ratios are fine, but the Liquidity Ratio should be improved. The Long Term Debt/Market Cap Ratio for 2020 is 0.76, decreasing to 0.68 currently. The Debt Ratio is fine at 1.67 as I like this ratio to be 1.50 or better. The Leverage and Debt/Equity Ratios are fine at 2.49 and 1.49, respectively.

The Liquidity Ratio is low, but it has always been low. For 2020 it is 0.53. Generally, to get to a value over 1.00, you would have to include cash flow after dividends and add back in the current portion of the long term debt. However, for 2020 I get a value of just 0.96. The current value is 1.03 and just cover 1.00. The problem is when the Liquidity Ratio is below 1.00, current assets cannot cover current liabilities. If you look at the Assets/Current Liability Ratio, it is 11.47. This is a high value and means that current liabilities are only a small part of the company’s assets.

The Total Return per year is shown below for years of 5 to 30 to the end of 2020. 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.
2015 5 11.74% 3.65% -2.41% 6.06%
2010 10 14.32% 9.34% 3.76% 5.58%
2005 15 12.99% 10.50% 5.53% 4.98%
2000 20 12.32% 11.55% 6.80% 4.76%
1995 25 10.79% 15.89% 9.74% 6.15%
1990 30 8.91% 10.69% 6.59% 4.10%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.03, 30.82 and 35.21. The corresponding 10 year ratios are 24.39, 30.88 and 36.90. The corresponding historical ratios are 17.85, 19.35 and 22.50. The current P/E Ratio is 17.21 based a stock price of $45.43 and EPS estimate for 2021 of $2.64. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $39.65. The 10 year low, median, and high median Price/Graham Price Ratios are 1.51, 1.82 and 2.13. The current P/GP Ratio is 1.15 based on a stock price of $45.43. This ratio is below the low median 10 year ratio of 1.51. 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 2.89. The current P/B Ratio is 1.72 based on a stock price of $45.43, Book Value of $53,620M and a Book Value per Share of $26.47. The current ratio is 41% below the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 10.18. The current P/CF Ratio is 8.54 based on a stock price of $45.43, Cash Flow per Share estimate for 2021 of $5.32 and Cash Flow of $10,788M. The current ratio is 16% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.50%. The current dividend yield is 7.35% based on dividends of $3.34 and a stock price of $45.43. The current dividend yield is 110% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 3.85%. The current dividend yield is 7.35% based on dividends of $3.34 and a stock price of $45.43. The current dividend yield is 91% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.54. The current P/S Ratio is 2.08 based on a stock price of $45.43, Revenue estimate for 2021 of $44,311M and Revenue per Share of $23.00. The current ratio is 35% 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 reasonable. The dividend yield tests say the stock price is cheap, but the P/S Ratio tests says it is expensive. The Dividend Payout Ratios for EPS are too high suggesting the dividend is too high. The P/S Ratios is not passed because Revenue is not expected to recover for a couple of years. The P/S Ratio for 2023 is 1.57 which is very close the current one of 1.54. I also like the P/B Ratio test and this says the stock price is cheap as do all the other tests.

Is it a good company at a reasonable price? I own stock in this company and I intend to keep it. I feel that this is a good long term investment in a dividend growth stock. The stock price current is probably reasonable. I think the problem is that although the company will recover from the recent problems, it may take a while. I do have patience for long term investments.

When I look at analysts’ recommendations, I find Strong Buy (9), Buy (12), Hold (3) and Underperform (1). The consensus is a Buy. The 12 month stock price consensus is $51.46. This implies a total return of 20.675 with 13.32% from capital gains and 7.35% from dividends.

Analysts give this stock on Stock Chase mostly a Buy recommendation. Ambrose O'Callaghan on Motley Fool says this company is a buy for the long term. The executive summary on Simply Wall Street gives this company 3 stars out of 5 and lists 3 risks. A writer on Simply Wall Street does not like the fact that dividends are growing with DPRs high and declining earnings. Dividend Guy on YouTube talks about whether the dividend is sustainable. Its complex, but the dividend should be fine and they should be able to increase them.

Enbridge Inc is an energy generation, distribution, and transportation company in the U.S. and Canada. Its web site is here Enbridge Inc.

The last stock I wrote about was about was Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more. The next stock I will write about will be TransAlta Corp (TSX-TA, NSYE-TAC) ... learn more on Wednesday, March 24, 2021 around 5 pm. Tomorrow on my other blog I will write about Canadian Dividend Stocks.... learn more on Tuesday, March 23, 2021 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.

Friday, March 19, 2021

Canadian Tire Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price is probably still reasonable. I have done well with this stock which I have had for some 21 years. See my spreadsheet on Canadian Tire Corp.

I own this stock of Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF). In 2000 when I first bought this stock, it was on the Investment Reporter's list of conservative Canadian stocks. I bought stock for my trading account in 2009 because I have done well with it in my Pension Account and it was a consumer stock.

When I was updating my spreadsheet, I noticed that I continue to do very well with this stock. I have had this stock since 2000 and have had a total return of 12.64% with 10.68% from capital gains and 1.96% from dividends. For the share I bought in 2000, I have a yield on my original investment of 20.4%. For the share I bought in 2009, my yield on my original investment is 8.8%. This is why I like dividend growth stocks.

The dividend yields are moderate with dividend growth moving to low. The current dividend yield is moderate (2% to 4% ranges) at 2.60%. The 5 year median dividend yield is also moderate at 2.24%. The 10 year and historical median dividend yields are low (below 2%) at 1.80% and 1.68%. The dividend growth for the last 5 year is 16.7% per year and is in the good range (15% and over). However, the last two dividend increases were lower. This has probably to do with C19 and uncertain near future. The last dividend increase was just 3.3% and in the low range (under8%) and it was for this year, 2021. The prior dividend for 2020 was in the moderate range (8% to 14% ranges) at 9.6%.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 is 37% with 5 year coverage at 31%. The DPR for CFPS for 2020 is 13% with 5 year coverage at 12%. The DPR for Free Cash Flow for 2020 is 13% with 5 year coverage at 32%. Sites again do not agree on what the FCF is.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good at 0.43. I also looked at how long it would take to pay off the debt with cash flow. A good answer is 3 years, and this company scores at 1.7 years. The Liquidity Ratio is good at 2.10. The Debt Ratio is a little low at 1.40 where I would like it to be at 1.50 or higher. Leverage and Debt/Equity Ratios for 2020 is 3.49 and 2.49 and a little high as I would prefer these ratios to be below 3.00 and 2.00.

The Total Return per year is shown below for years of 5 to 32 to the end of 2020. 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.
2015 5 16.72% 9.68% 7.21% 2.47%
2010 10 18.41% 11.60% 9.39% 2.21%
2005 15 14.72% 7.61% 6.03% 1.58%
2000 20 12.93% 13.78% 11.61% 2.17%
1995 25 10.21% 12.11% 10.13% 1.98%
1990 30 8.63% 8.06% 6.69% 1.37%
1988 32 9.63% 8.99% 7.43% 1.55%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.24, 13.04 and 14.84. The corresponding 10 year ratios are 10.85, 12.59 and 14.70. The corresponding historical ratios are 10.27, 13.59 and 14.84. The current P/E Ratio is 13.91 based on a stock price of $180.84 and EPS estimate for 2021 of $13.00. The current ratio is between the 10 year median and high median ratios of 12.59 and 14.70. This stock price testing suggests that the stock price is relatively reasonable but above the median.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, 25, and 30 year periods, I find the following. For example, total return over the past 15 years is 7.61% per year, the starting P/E Ratio (the one from 15 years ago) was 17.47. From the point of view of this chart, a P/E Ratio of 17.47 would be high.

Year Tot Return Start P/E
5 9.68% 13.72
10 11.60% 12.26
15 7.61% 17.47
20 13.78% 9.84
25 12.11% 10.87
30 8.06% 15.00

I get a Graham Price of $147.11. The 10 year low, median, and high median Price/Graham Price Ratios are 0.88, 1.00 and 1.11. The current P/GP ratio is 1.23 based on a stock price of $180.84. The current ratio is above the 10 year high median ratio of 1.11. 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 1.75. The current P/B Ratio is 2.44 based on a Book Value of $4,499M, Book Value per Share of $73.99 and a stock price of $180.84. The current ratio is 40% above the 10 year median P/B 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 8.38. The current P/CF Ratio is 6.60 based on a stock price of $180.84, Cash Flow per Share estimate for 2021 of $27.40 and Cash Flow of $1,666M. The current ratio is 21% 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 1.68%. The current dividend yield is 2.60% based on dividends of $4.70 and a stock price of $180.85. The current dividend is 55% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 1.80%. The current dividend yield is 2.60% based on dividends of $4.70 and a stock price of $180.85. The current dividend is 45% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.64. The current P/S Ratio is 0.74 based on Revenue estimate for 2021 of $14,946M, Revenue per Share of $245.79 and a stock price of $180.85. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median

Results of stock price testing is that the stock price is probably reasonable. The Dividend yield tests are showing the stock price as cheap, but this is not confirmed by the P/S Ratio test which says the stock price is reasonable but above the median. With the revenue, there is a great deal of uncertainty because of the C19. The rest of the tests are a mixed bag, but it is not good that the P/B Ratio testing says it is expensive.

Is it a good company at a reasonable price? The stock price is probably reasonable. I own this stock and still think it is doing well and it is a dividend growth stock. I realize there is more competition now for it, but I expect it will do fine. I intend to continue to hold my shares.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5), Hold (4) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $190.58. This implies a total return of 7.98% with 5.39% from capital gains and 2.60% from dividends.

Analysts on Stock Chase seem cautious about this stock. Chris MacDonald on Motley Fool thinks this stock is a current buy. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and list 2 risks. A writer on Simply Wall Street thinks this stock is currently fairly priced at 19% below his calculated intrinsic value. Michael Sprung on BNN discusses this stock.

Canadian Tire sells home goods, sporting equipment, apparel, footwear, automotive parts and accessories, and vehicle fuel across Canada. They operate primarily under the Mark's, SportChek, Party City, Atmosphere, PartSource and Helly Hansen. The firm also operates and holds majority ownership of a financing arm and a REIT. Its web site is here Canadian Tire Corp.

The last stock I wrote about was about was H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) ... learn more. The next stock I will write about will be Enbridge Inc (TSX-ENB, NYSE-ENB) ... learn more on Monday, March 22, 2021 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.

Wednesday, March 17, 2021

H & R Real Estate Trust

Sound bite for Twitter and StockTwits is: Dividend Paying REIT. The stock price is relatively cheap. They decreased their dividend last year. There has been insider buying. An analyst thinks the CEO is overpaid. A good reason to buy a REIT is for diversification. You tend to get high yield and little growth in dividends. See my spreadsheet on H & R Real Estate Trust.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

When I was updating my spreadsheet, I noticed insider started to buy when the stock was falling in March of last year at just under $20.00. Buying continued and the last buy was for $13.34.

The dividend yields are moderate with dividend growth currently non-existent. The current dividend yield is moderate (2% to 4% ranges) at 4.58%. The 5, 10 and historical median dividend yield are good (5% and 6% ranges) at 6.26%, 6.13% and 6.36%. This REIT has just reduced their dividends by 50% (in 2020). It has a mixed record when it comes to dividend changes. I have data for 23 years in which there were 17 years of increases and 2 years of decreases. They decreased their dividends by 50% in 2009 and they did not reach the pre-2009 dividend before this cut.

The Dividend Payout Ratios (DPR) are fine. Since there was an earnings loss in 2020, I cannot calculate the DPR or EPS for 2020. The 5 year coverage is 204%. Analysts expect this DPR to improve. The DPR for CFPS for 2020 is 39% with 5 year coverage at 51%. The DPR for Funds from Operations (FFO) for 2020 is 55% with 5 year coverage at 71.57%. The DPR for Adjusted Funds from Operations (AFFO) for 2020 is 72% with 5 year coverage at 91%. The DPR for Free Cash Flow (FCF) for 2020 is 70% with 5 year coverage at 74%. (Sites do not agree on FCF.)

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is 1.67. If you look at Covering Assets/Long Term Debt Ratio, it is fine at 0.55. (Coverage of Long Term Debt needs to be less than 1.00.) The Liquidity Ratio is fine at 1.45. The Debt Ratio is good at 1.83. The Leverage and Debt/Equity Ratios are fine at 2.20 and 1.20.

The Total Return per year is shown below for years of 5 to 24 to the end of 2020. 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.
2015 5 -7.38% -0.40% -7.90% 7.49%
2010 10 1.57% 3.82% -3.73% 7.55%
2005 15 -2.30% 3.95% -2.99% 6.94%
2000 20 -0.93% 10.34% 0.53% 9.80%
1996 24 1.32% 11.47% 1.19% 10.28%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.51, 16.71 and 18.91. The corresponding 10 year ratios are 14.33, 15.95 and 17.57. The corresponding historical ratios are 12.16, 14.25 and 17.50. The current P/E Ratio is 20.11 based on a stock price of $15.08 and EPS estimate for 2021 of $0.75. The current P/E Ratio is above the 10 year high median ratio of 17.57, this stock price testing suggests that the stock price is relatively expensive.

Since this is a REIT, we need to look also at Price/Fund from Operations Ratio. The 5 year low, median, and high median P/FFO per Share Ratios are 10.91, 11.61 ad 12.83. The corresponding 10 year ratios are 11.16, 11.098 and 13.02. The current P/FFO Ratio is 9.31 based on a stock price of $15.08 and FFO estimate for 2021 of $1.62. The current ratio is between the low and median 10 year median ratios of 10.91 and 11.61. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Since this is a REIT, we need to look also at Price/Adjusted Fund from Operations Ratio. The 5 year low, median, and high median P/AFFO per Share Ratios are 13.53, 14.40 and 15.53. The corresponding 10 year ratios are 13.51. 14.64 and 16.40. The current P/AFFO Ratio is 10.40 based on a stock price of $15.08 and FFO estimate for 2021 of $1.45. The current ratio is below the 10 low year median ratios of 13.51. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $27.78. The 10 year low, median, and high median Price/Graham Price Ratios are 0.65, 0.70 and 0.76. The current P/GP Ratio is 0.54 based on a stock price of $15.08. The current ratio is lower than the 10 year low median ratio of 0.65. 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 0.91. The current P/B Ratio is 0.71 based on a stock price of $15.08, Book Value of $6,071M, and a Book Value per Share of $21.16. The current ratio is 22% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 9.91. The current ratio is 10.13 based on a Cash Flow of the last 12 months of $427M, Cash Flow per Share of $1.49 and a stock price of $15.08. The current ratio is 2% above the 10 year median 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 6.36%. The current dividend yield is 4.58% based on dividends of $0.69 and a stock price of $15.08. The current dividend is 28% above 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 6.13%. The current dividend yield is 4.58% based on dividends of $0.69 and a stock price of $15.08. The current dividend is 25% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 5.37. The current P/S Ratio is 3.61 based on Revenue estimate for 2021 of $1,197M, Revenue per Share of $4.17 and a stock price of $15.08. The current ratio is 33% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is relatively cheap. The P/S Ratio test is showing this stock as relatively cheap. Note that if the dividend had not been cut, the dividend yield tests would show the stock price as relatively cheap. Most other tests are showing the stock as cheap or below the median. The exception is the P/E Ratio tests, but EPS is not considered to be as important the FFO and AFFO.

Is it a good company at a reasonable price? Yes, I believe the stock price is reasonable. I bought some REITs for diversification. They tend to have high yields and little growth.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (3) and Hold (2). The consensus would be a Buy. The 12 month stock price is $16.04. This implies a total return of 10.94% with 6.37% from capital gains and 4.585 from dividends based on a stock price of 16.04.

The last 3 recommendations on Stock Chase are Do Not Buy, Hold and Sell. Joey Frenette on Motley Fool thinks it is a top buy for a TFSA income stream. The Executive Summary on Simply Wall Street gives this stock 2 stars out of 5 and 3 risks. A writer on Simply Wall says the CEO of this company is being paid higher than the median. Griffin Milks on You Tube talks about this stock.

H&R Real Estate Investment Trust is a real estate investment trust principally involved in the ownership of properties in Canada and the U.S. H&R owns and manages a real estate portfolio rather equally divided between property in the Canadian provinces of Ontario and Alberta and in the U.S. Its web site is here H & R Real Estate Trust.

The last stock I wrote about was about was RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) ... learn more. The next stock I will write about will be Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more on Friday, March 19, 2021 around 5 pm. Tomorrow on my other blog I will write about Barrick Gold .... learn more on Thursday, March 18, 2021 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.

Tuesday, March 16, 2021

RioCan Real Estate

Sound bite for Twitter and StockTwits is: Dividend Paying REIT. Stock price is relatively cheap. Insiders are buying and this is good. They just cut their dividend. I do not like this, but I understand why. The debt ratios are good. DPR needs to be improved and analysts think it will be. I did not publish yesterday as I had a nosebleed that would not stop and had to spend hours in emergency. See my spreadsheet on RioCan Real Estate.

I own this stock of RioCan Real Estate (TSX-REI.UN, OTC-RIOCF). I first bought this stock in 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 for my stocks bought in 1998, 2000 and 2006, my yield on my original purchase price was 13.15%, 17.25%, and 6.72%. In 2021 they decreased the dividends from $1.44 to $0.96 and then these yields became 8.77%, 11.50%, 4.48%.

I noticed that my yield on my original investments is all above the current dividend yield of 4.94% except for my most recent purchase. Increases are important when you live off your dividends and I did not buy this stock for increases, but to diversify. Of course, in difficult times, some companies suspend and cut their dividends. It happens. Some others will increase them and different situation affect companies differently. Currently REITs are not doing well.

I noticed that insiders were buying in May 2021 shortly after the stock high a low in March 2021. Buying was between $14.00 and $16.00. Both the CEO and CFO have bought stock in the past year.

The dividend yields are moderate with dividend decline this year. The current dividend yield is moderate (2% and 4% ranges) at 4.94%. The 5 and 10 year median dividend yields are good (5% and 6% ranges) at 5.60% and 5.47%. The historical median dividend yield is high (7% and over) at 7.16%.

The Dividend Payout Ratios (DPR) are too high and need to be improved. The DPR for EPS for 2020 is non-calculable because they had an earnings loss. The 5 year DPR coverage is 82%. The DPR for CFPS for 2020 is 96% with 5 year coverage also at 96%. The DPR or FFO for 2020 109.09% with 5 year coverage at 99%. The DPR for Free Cash Flow (FCF) for 2020 is 93% and the 5 year coverage is 116%. (Although again, different sites give different FCF values.)

Because this is a REIT, we also need to like at DPR for Funds from Operations (FFO). The DPR or FFO for 2020 90% with 5 year coverage at 81%. We also need to look at the DPR for Adjusted Funds from Operations (AFFO).

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2020 is high at 0.99, but is better currently lower at 0.87. The Liquidity Ratio is good for 2020 at 4.21 as is the Debt Ratio for 2020 at 2.03. The Leverage and Debt/Equity Ratios are also good at 1.97 and 0.97.

The Total Return per year is shown below for years of 5 to 27 to the end of 2020. 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.
2015 5 0.42% 0.19% -6.70% 6.89%
2010 10 0.43% 4.46% -2.69% 7.15%
2005 15 0.83% 4.83% -2.03% 6.86%
2000 20 1.49% 14.20% 2.93% 11.27%
1995 25 3.74% 17.29% 4.09% 13.20%
1993 27 4.76% 13.88% 3.28% 10.60%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.98, 10.51 and 11.96. The corresponding 10 year ratios are 9.83, 12.17 and 11.05. The corresponding historical ratios are 8.34, 12.51 and 13.36. The current P/E Ratio is 55.57 based on a stock price of $19.45 and EPS estimate for 2021 of $0.35. This stock price testing suggests that the stock price is relatively expensive. Analysts do not seem to think that the company will have much in EPS for 2021 after an EPS loss in 2020.

Because this is a REIT, we should also look at Price/Funds from Operations Ratios. The 5 year low, median, and high median P/FFO Ratio are 12.64, 13.75 and 15.08. The corresponding 10 year ratios are 13.35, 14.92 and 17.17. The current P/FFO Ratio is 12.80 based on a stock price of $19.45 and FFO estimate for 2021 of $1.52. The current ratio is between the low and median 10 year median P/FFO ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Because this is a REIT, we should also look at Price/Adjusted Funds from Operations Ratios. The 5 year low, median, and high median P/AFFO Ratio are 15.90, 17.13 and 19.03. The corresponding 10 year ratios are 16.05, 17.51 and 19.33. The current P/AFFO Ratio is 14.96 based on a stock price of $19.45 and AFFO estimate for 2021 of $1.30. The current ratio is below the 10 year low median P/AFFO ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $26.43. The 10 year low, median, and high median Price/Graham Price Ratios are 0.83, 0.92 and 1.04. The current P/GP Ratio is 0.71 based on a stock price of $19.45. The current ratio is below the 10 year low median P/GP ratio. 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 1.07. The current P/B Ratio is 0.81 based on a Book Value of $7,590M, Book Value per Share of $23.89 and a stock price of $19.45. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 18.48. The current P/CF Ratio is 11.18 based on last 12 month Cash Flow of $553M, Cash Flow per Share of $1.74 and a stock price of $19.45. The current

I get an historical median dividend yield of 7.16%. The current dividend yield is 4.94% based on dividends of $0.96 and a stock price of $19.45. The current dividend yield is 31% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 5.47%. The current dividend yield is 4.94% based on dividends of $0.96 and a stock price of $19.45. The current dividend yield is 10% below the historical dividend yield. 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 7.14. The current P/S Ratio is 5.31 based on Rental Revenue of $1,110M, Revenue per share of $3.66 and a stock price of $19.45. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is relatively cheap? The P/S Ratio test shows this. The dividend yield test shows that it is at least reasonable by the 10 year median yield test. However, this company just lower their dividends and if it had not, it would have been reasonable or cheap by these tests. Another of other tests show this stock as cheap.

Is it a good company at a reasonable price? I will continue to hold this stock. They have a decent reputation when it comes to dividends. I have tracked them for 27 years and there has been only one decrease which was in 2021. Of the 27 years, they increased the dividend 19 times, but unfortunately none of these increases have been recent. I am still making total return of 9.83% all of which is coming from dividends. The stock has yet to fully recover from C19 problems.

When I look at analysts’ recommendations, I find Strong Buy (3), buy (2) and Hold (3). The consensus would be a Buy. The 12 month price consensus is $20.19. This implies a total return of 8.74% with 3.80% from capital gains and 4.94% from dividends based on a current stock price of $19.45.

Last three entries say Do Not Buy on Stock Chase. Analysts have concerns about this company. Christopher Liew on Motley Fool says to avoid this REIT due to Bond Yield spike. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and list two risks. A writer on Simply Wall Street thinks it is good to buy shares when they are price low, but be sure you are buying a high quality business. Brandon Beavis on YouTube talks about this stock. This is a rather long video at 20 minutes, but if you have this stock or thinking of buying it, it is worth it.

RioCan Real Estate Investment Trust is a Canadian real estate investment trust which owns, develops, and operates 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. Its web site is here RioCan Real Estate.

The last stock I wrote about was about was Home Capital Group (TSX-HCG, OTC-HMCBF) ... learn more. The next stock I will write about will be H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) ... learn more on Wednesday, March 17, 2021 around 5 pm. Today on my other blog I will write about How Did I Do Last Year.... learn more on Tuesday, March 16, 2021 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.