Is it a good company at a reasonable price? This company as a REIT has done better than it did when I owned it as a real estate company and part of Magna. REITs can provide good income and this is a major reason to buy them. The yield is reasonable at 4.31% currently and as you can see from the chart below, if you bought the stock at the current price of $74.20, in 10 years you would be earning 6.11% in yield and have covered 41.69% of the cost of the stock if increases continue at 3.55%. The price could still be reasonable, but it is probably at the high end of the reasonableness range.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $3.81 | 5.13% | 5 | 3.55% | 23.15% |
| $4.53 | 6.11% | 10 | 3.55% | 41.69% |
| $5.40 | 7.27% | 15 | 3.55% | 72.26% |
I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U), but I used to. I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again. However, it has done well for shareholders over the past 10 years. See below.
When I was updating my spreadsheet, I noticed the Liquidity Ratio is very low. It is 0.44 at the end of 2022 and 0.30 at the end of June 2023. However, the debt is due later in the year and the company does have options about it at that time. If you take into account the debt due later this year then the ratio becomes 1.61.
Also, this stock hit a high in 2021 and is down by 34% between the end of 2021 and 2022. Stock is up a bit, year to date by some 8.7%. So, at the end of 2021 stock price was $105.40 CDN$, at the end of 2022 at $69.08 CDN$ and currently is at $75.07 CDN$. Compare the total returns to the end of 2021 below in CDN$ to those further down of the total returns to the end of 2022.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 4.54% | 23.60% | 18.65% | 4.95% |
| 2011 | 10 | 13.89% | 17.29% | 12.45% | 4.84% |
| 2006 | 15 | 10.20% | 9.05% | 6.38% | 2.68% |
| 2002 | 19 | 10.91% | 10.10% | 7.47% | 2.62% |
If you had invested in this company in December 2012, for $1,019.52 you would have bought 27 shares at $37.76 per share. In December 2022, after 10 years you would have received $737.93 in dividends. The stock would be worth $1,865.16. Your total return would have been $2,603.09. This is a total return would be a loss of 11.70% per year with 6.23% from capital gain and 5.47% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.76 | $1,019.52 | 27 | 10 | $737.93 | $1,865.16 | $2,603.09 |
The current dividend yield is moderate with dividend growth low. The dividend yield is moderate (2% to 4% ranges) at 4.26%. The 5 year median and historical median dividend yields are also moderate at 4.56% and 4.17%. The 10 year median dividend yield is good (5% to 6% ranges) at 5.30%. The dividend growth is low (below 8%) at 3.6% per year over the past 5 years. The last dividend increase was in 2023 and it was for 3.25%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 130% with 5 year coverage at 84%. I do not know what the DPR for EPS will be next year as the 12 months EPS is negative. However, for a REIT, the DPR for AFFO and FFO is the most important ones. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 77% with 5 year coverage at 81%. The DPR for 2022 for Funds from Operations (FFO) is 70% with 5 year coverage at 74%. Both the AFFO and FFO DPRs are fine.
The DPR for 2022 for Cash Flow per Share (CFPS) is 56% with 5 year coverage at 68% and this is fine. The DPR for 2022 for Free Cash Flow (FCF) is 49% with 5 year coverage at 64% and this is fine.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 129.94% | 83.61% |
| AFFO | 76.53% | 80.80% |
| FFO | 69.81% | 74.07% |
| CFPS | 56.71% | 68.23% |
| FCF | 49.42% | 64.48% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good for 2022 at 0.59 and 0.64 currently. The Liquidity Ratio is low at 2022 at 0.44. If you add in Cash Flow after dividends, it is just 0.57. This means that the current assets cannot cover the current liabilities, that is when this ratio is below 1.00 and it is best at 1.50. The Debt Ratio for 2022 is good at 2.44. The Leverage and Debt/Equity Ratios for 2022 is good at 1.69 and 0.69.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.59 | 0.64 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.44 | 0.30 |
| Liq. + CF | 0.57 | 0.47 |
| Liq. CF Dt | 1.61 | 1.81 |
| Debt Ratio | 2.44 | 2.42 |
| Leverage | 1.69 | 1.70 |
| D/E Ratio | 0.69 | 0.70 |
The Total Return per year is shown below for years of 5 to 20 to the end of 2022 in CDN$. 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 | 3.55% | 12.65% | 7.00% | 5.65% |
| 2012 | 10 | 4.48% | 11.70% | 6.23% | 5.47% |
| 2007 | 15 | 11.66% | 10.69% | 6.27% | 4.42% |
| 2002 | 20 | 10.50% | 8.22% | 4.85% | 3.37% |
The Total Return per year is shown below for years of 5 to 20 to the end of 2022 in US$. 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 | 1.97% | 11.04% | 5.46% | 5.57% |
| 2012 | 10 | 1.34% | 7.87% | 2.98% | 4.89% |
| 2007 | 15 | 9.34% | 8.37% | 4.11% | 4.26% |
| 2002 | 20 | 10.22% | 9.72% | 5.66% | 4.06% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.42, 7.87 and 8.85. The current P/E Ratio is negative for the last 12 months so, I cannot do any testing with this.
I have Adjusted Funds from Operations, (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 15.93, 17.51 and 20.91. The corresponding 10 year ratios are 12.26, 15.67 and 17.92. The current P/AFFO Ratio is 16.75 based on 2023 estimate for AFFO of $4.43 and a stock price of $74.20. This ratio is between the median and low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I have Funds from Operations, (AFFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 14.53, 16.95 and 20.01. The corresponding 10 year ratios are 12.37, 14.53 and 15.78. The current P/AFFO Ratio is 14.9375 based on 2023 estimate for FFO of $4.97 and a stock price of $74.20. This ratio is between the median and low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $97.06. The 10-year low, median, and high median Price/Graham Price Ratios are 0.71, 0.79 and 0.88. The current P/GP Ratio is 0.76 based on a stock price $74.20. The current ratio is between the median and low ratios of the 10 year median ratios. 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 1.05. The current P/B Ratio is 0.88 based on a stock price of $74.20, Book Value of $5,367M and Book Value per Share of $84.25. 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 a 10-year median Price/Cash Flow per Share Ratio of 15.20. The current ratio is 15.99 based on Cash Flow for the last 12 months of $295.66, Cash Flow per Share of $4.64 and a stock price of $74.20. The current ratio is 5% 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 4.17%. The current dividend yield is 4.31% based on a dividend of $3.2004, and a stock price of $74.20. The current dividend yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 5.30%. The current dividend yield is 4.31% based on a dividend of $3.2004, and a stock price of $74.20. The current dividend yield is 19% below the historical median 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 9.91. The current P/S Ratio is 9.00 based on a stock price of $74.20 and Revenue estimate for 2023 of $525M, Revenue per Share of $8.24 and a stock price of $74.20. The current ratio is 9% 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 still reasonable, but perhaps at the high end of that range. Most of the testing is suggesting that the stock price is reasonable, but I not think that we can ignore the 10 year median yield test which is suggesting the at the stock price is still reasonable but at the high end of the reasonableness range.
When I look at analysts’ recommendations, I find Strong Buy (5) and Buy (6). The consensus would be a Strong Buy. The 12 months stock price consensus is $94.55. This implies a total return of $31.74 based on a stock price of $74.20 with 27.43% from capital gains and 4.31% from dividends.
Last year when I look at analysts’ recommendations, I found Strong Buy (5) and Buy (6). The consensus would be a Strong Buy. The 12 months stock price consensus is $97.64. This implies a total return of 46.72% with 42.21% from capital gains and 4.51% from dividends based on a stock price of $68.66. What happened was a stock price move to $74.20 for a total return of 12.58% with 8.07% from capital gains and 4.51% from dividends.
Last year I said that the results of stock price testings were that the stock price is reasonable. It also seems to be above the median. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. The P/AFFO and P/FFO tests are also showing a reasonable, but above the median results and these, for REITs, are better tests than a P/E Ratio test. It would seem that last year the stock price was reasonable and shareholders got a reasonable return.
Most analysts on Stock Chase think this stock is a buy. This stock is on the Maple Money list and the Aristocrat list, but not on the Money Sense List. Money Sense has no REITs. Stock Chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool thinks that industrial REITs are a great option. Kay Ng on Motley Fool thinks this stock is great for passive income. The company put out a press release on Business Wire about their results for 2022. The company put out a press release on Business Wire about their second quarter of 2023 results.
Zacks Equity Research via Yahoo Finance review this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street has one warning of debt is not well covered by operating cash flow
Granite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, ownership, and management of logistics, warehouse and industrial properties in North America and Europe. The vast majority of the company's assets are logistics and distribution warehouses and multipurpose buildings split fairly evenly amongst Canadian, Austrian, and U.S. locations. The company's tenant is Magna International, an automotive parts and systems manufacturer, which accounts for the majority of Granite's lease income. Its web site is here Granite REIT.
The last stock I wrote about was about was Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ...learn more. The next stock I will write about will be K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more on Monday, September 25, 2023 around 5 pm.
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