Is it a good company at a reasonable price? This is a REIT and you would buy it for diversification reasons. I have a few REITs for this reason. I think this is a good REIT. The thing with REITs is that you will get half, or almost half of your total return from distributions. The price is currently reasonable, but above the median (or on the top end of a reasonableness range.)
I own this stock of Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF). I got this stock when CDN REIT was acquired by Choice Properties. Choice was originally a spin off from Loblaws. Later George Weston Limited (TSX-WN) in a reorganization received Loblaw’s share of Choice (61.6% interest) and Loblaws minority shareholders got George Weston Limited shares. The Weston Family owns a majority share in George Weston Ltd and George Weston Limited has a controlling interest in Loblaws.
When I was updating my spreadsheet, I noticed I have done very well with this stock and Canadian REIT which was bought out with me receiving Choice shares. I bought Canadian REIT 16 years ago and I have made a total return of 10.52% per year with 5.38% from Capital gains and 5.14% from dividends. Since I have had Choice (from 2018), I have made a total return of 10.76% per year with 4.95% from capital gains and 5.48% from Dividends.
If you had invested in this company in December 2013, for $1,009.92 you would have bought 96 shares at $10.52 per share. In December 2022, after 9 years you would have received $553.20 in dividends. The stock would be worth $1,416.96. Your total return would have been $1,970.16. This can be a benefit of dividend stock, where in this case you would not have lost money due to dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.52 | $1,009.92 | 96 | 9 | $553.20 | $1,416.96 | $1,970.16 |
The dividend yields are moderate with dividend growth currently non-existent. The current dividend yield is moderate (2% to 4%) at 4.99%, but it is close to good (5% to 6% ranges). The 5, 9 year and historical median dividend yields are good (5% to 6% ranges) at 5.66%, 5.51% and 5.51%. Dividends have been paid for 9 years which was when this company was listed. Dividends have been flat since 2018. Some Analysts thinks there might be small increases soon.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 72% with 5 year coverage at 188%. I also have Funds from Operations (FFO), and Adjusted Funds from Operations (AFFO) data. Dividend DPRs are usually based on these values. The DPR for 2022 for FFO is 77% with 5 year coverage at 76%. The DPR for 2022 for AFFO is 92% with 5year coverage at 90%. The DPR for Cash Flow per Share (CFPS) for 2022 is 29% with 5 year coverage at 34%. There is no agreement on what the Free Cash Flow but the differences are that high. One has DPR for 2022 at 58% with 5 year coverage at 83%.
Debt Ratios need improving and they have a lot of debt. I get a Long Term Debt/Market Cap Ratio of 0.59 and this is fine. I get a Liquidity Ratio of 3.28 but this is not an important one for REITs. The Debt Ratio is low at 1.29 and I would like it to be higher. The Leverage and Debt/Equity Ratios at 4.40 and 3.40 are too high and I would like them to be below 3.00 and 2.00.
The Total Return per year is shown below for years of 5 to 9 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.34% | 7.37% | 2.03% | 5.34% |
| 2013 | 9 | 1.45% | 9.70% | 3.83% | 5.87% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.77, 14.61and 15.45. The corresponding 9 year ratios are 13.44, 14.23 and 15.01. The corresponding historical ratios are 13.44, 14.23 and 15.01. The current P/E Ratio is 14.42 based on a stock price of $14.83 and EPS for the last 12 months of $1.03. The current ratio is between the median and high ratios of the 9 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.56, 1394 and 16.00. The corresponding 9 year ratios are 11.55, 13.09 and 14.79. The current P/E Ratio is 14.98 based on FFO estimate for 2023 of $0.99 and a stock price of $14.83. The current ratio is above the 9 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.54, 16.05 and 18.79. The corresponding 9 year ratios are 13.87, 1575 and 17.74. The current P/E Ratio is 16.48 based on AFFO estimate for 2023 of $0.90 and a stock price of $14.83. The current ratio is between the median and high ratios of the 9 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $14.65. The 10-year low, median, and high median Price/Graham Price Ratios are 0.81, 0.91 and 1.03. The current P/GP Ratio is 1.01 based on a stock price of $14.83. The current ratio is between the median and high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.35. The current P/B Ratio is 1.54 based on a Book Value of $3,816M, Book Value per Share of $9.64 and a stock price of $14.83. 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 get a 10-year median Price/Cash Flow per Share Ratio of 4.78. The current P/CF Ratio is 9.27 based on Cash Flow for the last 12 months of $633M, Cash Flow per Share of $1.60 and a stock price of $14.83. The current ratio is 94% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 9 year and historical median dividend yield of 5.51%. The current dividend yield is 4.99% based on a stock price of $14.83 and dividends of $0.74. The current ratio is 9% below the 9 year and historical ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 9-year median Price/Sales (Revenue) Ratio is 7.13. The current P/S Ratio is 7.63 based on a stock price of $14.83, Revenue estimate for 2023 of $1,406M and Revenue per Share of $1.94. The current ratio is 7% above the 9 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 it is above the median. The 9 year and historical median dividend tests say this and it is confirmed by the P/S Ratio test. The dividend yield tests do not work as well with flat dividends. However, dividends are set depending on how management sees the future, so they so have some validity. Most of the testing is showing a stock price that is reasonable but above the median.
When I look at analysts’ recommendations, I find Buy (3) and Hold (5) recommendations. The consensus would be a Hold. The 12 month stock price if $15.75. This implies a total return of 11.19% with 6.20% from capital gains and 4.99% from dividends based on a current stock price of $14.83.
This stock is well liked by analysts on Stock Chase . Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense list because this list has no REITs. Amy Legate-Wolfe on Motley Fool says to buy this for passive monthly income. Robin Brown on Motley Fool also thinks this stock is a buy for passive monthly income. The company put out a Press Release about their fourth quarter for 2022.
Simply Wall Street via Yahoo Finance talks about recent insider buying. Simply Wall Street gives this stock 3 stars out of 5. Simply Wall Street has 3 warnings of interest payments are not well covered by earnings; unstable dividend track record; large one-off items impacting financial results. Dividends are not unstable, but if you American, they are paid in CDN$, so dividends will fluctuate with the US$, CDN$ exchange rate.
Choice Properties Real Estate Investment Trust invests in, manages, and develops retail and commercial properties across Canada. The company's portfolio primarily consists of shopping centers anchored by supermarkets and stand-alone supermarkets. The properties are mostly located in Ontario and Quebec, followed by Alberta, Nova Scotia, British Columbia, and New Brunswick. Its web site is here Choice Properties REIT.
The last stock I wrote about was about was Manulife Financial Corp (TSX-MFC, NYSE-MFC) ... learn more. The next stock I will write about will be Russel Metals Inc (TSX-RUS, OTC-RUSMF) ... learn more on Monday, February 27, 2023 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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