Is it a good company at a reasonable price? The stock price is reasonable, but it is above the median. I am pleased with my investment in this company. However, note that this is rather a small company which is not much followed by analysts. It is therefore on the risky side. This stock is more suitable for registered accounts (RSP, RIF, TFSA) as the dividends are taxed as interest.
I own this stock of Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF). I saw this on company on the Canadian Dividend All-Star List. It has just recently started to pay dividends. It has only been around since 2012 and has good dividends. Dividends are good but are taxed as income.
When I was updating my spreadsheet, I noticed I have done very well with this stock. My total return is 16.54% over the 4 year I have had this stock. I received 9.26% from capital gains and 7.28% from dividends. Since the payout is interest, this stock is best held in a TFSA or RSP account.
If you had invested in this company in December 2011, $1009.82 you would have bought 102 shares at $9.90 per share. In December 2021, after 10 years you would have received $835.88 in dividends. The stock would be worth $1,433.10. Your total return would have been $2,268.98.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $9.90 | $1,009.82 | 102 | 10 | $835.88 | $1,433.10 | $2,268.98 |
The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.36%. The 5 year median dividend yields are also good at 6.87%. The 8 year median dividend yields are also high (7% and above) at 7.09%. They have paid a special dividend in most years (a median of $0.05) which added an median of $0.45% to the yield. The dividends have been flat for the last 4 years. However, they give out special dividends each year and these special dividends vary each year.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 93.9% with 5 year coverage at 99.5%. The thing is that this company usually pays a special dividend each year. The above includes the special dividends. The DPR for EPS for 2021 excluding the special dividends is 91.8% with 5 year coverage at 89.5%. The DPR for 2021 for Cash Flow per Share is 59% with 5 year coverage at 76%. The DPR for Free Cash Flow for 2021 is 51% with 5 year coverage at 64%. I think because of their business they can afford to pay out high DPRs. I looked at the TD Report and they also support this position.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.30 and is low and good. The Liquidity Ratio for 2021 is 213.09 and very high. The Debt Ratio is also high at 2.54. For Liquidity Ratio and Debt Ratios, the higher the better. The Leverage and Debt/Equity Ratios for 2021 are low and good at 1.65 and 0.65.
The Total Return per year is shown below for years of 5 to 12 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.95% | 10.36% | 2.95% | 7.41% |
| 2011 | 10 | 2.59% | 10.30% | 3.56% | 6.74% |
| 2009 | 12 | 8.15% | 3.50% | 4.65% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.63, 13.85 and 15.06. The corresponding 10 year ratios are 11.86, 12.76 and 13.72. The current P/E Ratio is 14.02 based on a stock price of $14.16 and EPS estimate for 2022 of $1.01. The current ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $15.80. The 10 year low, median, and high median Price/Graham Price Ratios are 0.74, 0.80, and 0.86. The current P/GP Ratio is 0.90 based on a stock price of $14.16. The current ratio is above the 10 year high median ratios. 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 1.13. The current P/B Ratio is 1.29 based on a stock price of 14.16, Book Value of $470M and a Book Value per Share of $10.98. The current ratio is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. I have analysts Book Value per Share also, but this gives a P/B Ratio of 1.29, so the results are the same as above.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.67. The current P/CF Ratio is 8.93 based on Cash Flow for the last 12 months of $67.9M, Cash Flow per Share of $1.59 and a stock price of $14.16. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an 8 year and historical median dividend yield of 7.09%. The current dividend yield is 6.36% based on a stock price of $14.16 and Dividends of $0.90. The current dividend yield is lower than the 8 year median dividend yield by 10%. 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 8.11. The current P/S Ratio is 9.05 based on a stock price of 14.16, Revenue estimate for 2022 of $67.4M, and Revenue per Share of $1.57. The current ratio is 11% 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, but above the median. Both the dividend yield test and the P/S Ratio test show the stock price as reasonable but above the median. The rest of the testing shows the stock price as either cheap or expensive.
Last year I said that the results of stock price testing were that the stock price is probably reasonable. Both the dividend yield test and the P/S Ratio test show the stock price as reasonable but above the median, but they are both above the median by less than 3%. All the tests seem to say the same thing, that the stock price is reasonable, but above the median.
When I look at analysts’ recommendations, I find Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $15.33. This implies a total return of 14.62% with 8.26% from capital gains and 6.36% from dividends based on a stock price of $14.16.
When I looked at analysts’ recommendations last year, I found Strong Buy (1) and Buy (2). The consensus was a Buy. The 12 month price consensus was $13.77. This implies a total return of 13.54% with 6.58% from capital gains and 6.97% from dividends based on a stock price of 12.92. What happened was a stock price of $14.16 and a total return of 16.57% with 9.60% from capital gains and 6.97% from dividends.
Stock Chase has not recommendations on this stock. Aditya Raghunath on Motley Fool thinks this company is selling at an attractive price with a good yield. Vishesh Raisinghani on Motley Fool thinks it is passive-income opportunity. The company talks about fourth quarter results on Newsfile via Yahoo Finance. Simply Wall Street on Yahoo Finance has an interesting take on dividends. However, the company has not cut their dividends. SWS might be referring to the exchange rate as the dividends are paid in CDN$ or maybe to special dividends which change each year.
Atrium Mortgage Investment Corp is a non-banking finance company providing residential and commercial mortgages that lends funds in major urban centres in Canada where the stability and liquidity of real estate are high. The company generates its revenue from mortgage interest and fees. Its web site is here Atrium Mortgage Investment Corp.
The last stock I wrote about was about was Russel Metals Inc (TSX-RUS, OTC-RUSMF) ... learn more. The next stock I will write about will be TFI International Inc (TSX-TFII, OTC-TFIFF) ... learn more on Friday, March 4, 2022 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios 3.... learn more on Thursday, March 3, 2022 around 5 pm.
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