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.
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