Is it a good company at a reasonable price? This is a REIT and the reason you would buy this stock is because of the distribution (dividend). In the past 20 years, the dividend yield has varied from a high in the 16% range and low in the 4% range, with median dividends in the 5% range. For capital gains, I would not expect much. Personally, I hopefully expect growth of around the rate of background inflation, which is 3% per year. I expect a total return of around 8%. Results of stock price testing is that the stock price is probably cheap.
I own this stock of SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. This stock is not always on this list because of periods of flat dividends.
When I was updating my spreadsheet, I noticed I have had this stock from 2021, just over 2 years. I bought it with my fooling around money as I have had not much luck with REITs. I have a total return of 8.14%, with 0.32% from capital gains and 7.82% from dividends. Let us face it, for REITs you make most of your money from distributions, and little from capital gains. An 8% total return is a good one and reasonable to expect.
There was initially some good growth with this stock. However, there has not been much growth lately. The Problem with growth of AFFO and FFO is that how these values are calculated seems to have changed over time. There is a trade off between yield and dividend growth. The higher the yield the lower the growth.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 9.61% | 1.85% |
| 5 | AFFO Growth | -8.03% | -1.66% |
| 5 | FFO Growth | -4.75% | -0.97% |
| 5 | Net Income Growth | 76.72% | 12.06% |
| 5 | Cash Flow Growth | 5.01% | 0.98% |
| 5 | Dividend Growth | 8.29% | 1.61% |
| 5 | Stock Price Growth | -13.36% | -2.83% |
| 10 | Revenue Growth | 47.35% | 3.95% |
| 10 | AFFO Growth | 11.61% | 1.10% |
| 10 | FFO Growth | 16.74% | 1.56% |
| 10 | Net Income Growth | -42.56% | -5.39% |
| 10 | Cash Flow Growth | 73.62% | 5.67% |
| 10 | Dividend Growth | 19.51% | 1.80% |
| 10 | Stock Price Growth | -7.50% | -0.78% |
| 15 | Revenue Growth | 112.00% | 5.14% |
| 15 | AFFO Growth | 15.24% | 0.95% |
| 15 | FFO Growth | 19.20% | 1.18% |
| 15 | Net Income Growth | 1592.24% | 20.75% |
| 15 | Cash Flow Growth | 130.47% | 5.72% |
| 15 | Dividend Growth | 21.71% | 1.32% |
| 15 | Stock Price Growth | 9.35% | 0.60% |
| 20 | Revenue Growth | 22189.45% | 31.04% |
| 18 | AFFO Growth | 48.29% | 2.21% |
| 20 | FFO Growth | 157.54% | 4.84% |
| 20 | Net Income Growth | 35641.00% | 34.17% |
| 20 | Cash Flow Growth | 26021.88% | 32.08% |
| 19 | Dividend Growth | 60.76% | 2.53% |
| 20 | Stock Price Growth | 176.08% | 5.21% |
If you had invested in this company in December 2012, for $1,013.25 you would have bought 35 shares at $28.95 per share. In December 2022, after 10 years you would have received $601.90 in dividends. The stock would be worth $937.30. Your total return would have been $1,529.20. This is a total return would be 5.29% per year with 0.78% from capital loss and 6.07% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $28.95 | $1,013.25 | 35 | 10 | $601.90 | $937.30 | $1,539.20 |
The current dividend yield is high with dividend growth non-existent. The current dividend yield is high (7% and above) at 7.55%. The 5, 10 and historical dividend yields are good (5% to 6% ranges) at 6.43%, 5.75% and 5.93%. The dividend growth has stopped in 2020 and analysts do not expect any increases in the near future. The 5 year dividend growth is 1.6% per year. Over the past 20 years, the dividend has increase in only 12 years. So, a current flat dividend is not unusual for this stock.
The Dividend Payout Ratios (DPR) are fine except for the one for AFFO and this could be a problem. The DPR for 2022 for Earnings per Share (EPS) is 64% with 5 year coverage at 76%. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 97% with 5 year coverage at 88%. The current one is high as generally the DPR for FFO should be between 75% and 95%, and it is not expected to move lower in the near future, so this could be a problem. The DPR for 2022 for Funds from Operations (FFO) is 89% with 5 year coverage at 84%. The DPR for 2022 for Cash Flow per Share (CFPS) is 66% with 5 year coverage at 65%. The DPR for 2022 for Free Cash Flow (FCF) is 72% with 5 year coverage at 67%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 64.41% | 76.07% |
| AFFO | 96.71% | 88.22% |
| FFO | 88.69% | 83.98% |
| CFPS | 66.40% | 64.77% |
| FCF | 72.51% | 67.27% |
Debt Ratios are currently fine, but Liquidity could cause a problem in the future. The Long Term Debt/Market Cap Ratio for 2022 is 0.99 and moving to 1.11 currently. The current one is too high. However, I also have the Long Term Debt/Covering Asset Ratio and that is fine at 0.44 currently. The Liquidity Ratio is very low at 0.38 and even if you add in Cash Flow after dividends, it is still 0.46. Only when you add in current portion the long term debt does it get to a relatively fine level of 1.45. If you do this you must check to ensure debt will roll over. The Debt Ratio is good at 2.11. Leverage and Debt/Equity Ratios are good at 1.90 and 0.90.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.99 | 1.11 |
| Lg Term A | 0.44 | 0.45 |
| Intang/GW | 0.01 | 0.01 |
| Liquidity | 0.38 | 0.64 |
| Liq. + CF | 0.46 | 0.73 |
| Liq CF DT | 1.45 | 1.95 |
| Debt Ratio | 2.11 | 2.13 |
| Leverage | 1.90 | 1.88 |
| D/E Ratio | 0.90 | 0.88 |
The Total Return per year is shown below for years of 5 to 25 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 | 1.61% | 3.40% | -2.83% | 6.22% |
| 2012 | 10 | 1.80% | 5.29% | -0.78% | 6.07% |
| 2007 | 15 | 1.32% | 7.03% | 0.60% | 6.43% |
| 2002 | 20 | 2.53% | 16.32% | 5.21% | 11.11% |
| 1997 | 25 | 26.83% | 11.70% | 15.13% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.65, 14.63 and 15.61. The corresponding 10 year ratios are 12.72, 13.80 and 15.05. The corresponding historical ratios are 13.32, 16.43 and 18.76. The current P/E Ratio is 9.39 based on a stock price of $24.51 and EPS estimate for 2023 of $2.61. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. Note that the company does not think that EPS on this stock matters.
I have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 11.57, 13.29 and 15.15. The corresponding 10 year ratios are 12.71, 14.03 and 15.42. The current P/FFO Ratio is 11.24 based on a stock price of $24.51 and FFO estimate for 2023 of $2.18. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 12.62, 14.18 and 15.70. The corresponding 10 year ratios are 13.45, 15.08 and 16.29. The current P/AFFO Ratio is 13.04 based on a stock price of $24.51 and AFFO estimate for 2023 of $1.88. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $38.78. The 10-year low, median, and high median Price/Graham Price Ratios are 0.77, 0.84 and 0.94. The current P/GP Ratio is 0.63 based on a stock price of $24.51. The current ratio is below the low ratio of the 10 year median ratios. 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 1.15. The current P/B Ratio is 0.80 based on a Book Value of $5,220M, Book Value per Share of $30.66 and a stock price of $24.51. The current ratio is 30% below the 10 year median ratios. 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 14.75. The current P/CF Ratio is 11.37 based on Cash Flow for the last 12 months of $367.2M, Cash Flow per Share of $2.16 and a stock price of $24.51. The current ratio is 23% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.93%. The current dividend yield is 7.55% based on a stock price of $24.51 and dividends of $1.85. The current dividend yield is 27% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.93%. The current dividend yield is 7.55% based on a stock price of $24.51 and dividends of $1.85. The current dividend yield is 27% 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 5.75%. The current dividend yield is 7.55% based on a stock price of $24.51 and dividends of $1.85. The current dividend yield is 31% 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 6.25. The current P/S Ratio is 4.90 based on a stock price of $24.51, Revenue estimate for 2023 of $852 and a stock price of $24.51. The current ratio is 22% 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 probably cheap. The Dividend yield tests are pointing to the stock price being cheap. This is confirmed by the P/S Ratio test. All the other tests are pointing to the stock price being cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (5) and Underperform (1). The Consensus would be a Hold. The 12 month consensus stock price is $28.81, with a high of $31.00 and low of $26.00. The 12 month consensus stock price implies a total return of 25.09 with 17.54% from capital gains and 7.55% f rom dividends.
Recent analysts’ recommendations on Stock Chase are all Holds. But they feel dividend is safe. Stock Chase gives this stock 3 stars out of 5. This stock is on Maple Money and surprisingly on Canadian Dividend Aristocrats Index. Ambrose O'Callaghan on Motley Fool thinks this stock is good for income in a TFSA. Aditya Raghunath on Motley Fool thinks this stock is also good for generating income in a TFSA. The company put out a press release on Global Newswire about their results for 2022. The company put out a press release on Globe Newswire about their results for the second quarter of 2023. Simply Wall Street remarks on this company’s yearend of 2022. Simply Wall Street has two warnings on this stock of debt is not well covered by operating cash flow; and profit margins (36%) are lower than last year. Simply Wall Street gives this stock 3 and one half stars out of 5.
SmartCentres Real Estate Investment Trust is a Canadian fully integrated commercial and residential REIT. The company is developing complete, connected, mixed-use communities on its existing retail properties, under its wholly-owned residential sub-brand, SmartLiving. The Trust develops, leases, constructs, owns, and manages shopping centres, office buildings, high-rise and low-rise condominiums and rental residences, seniors' housing, townhome units, self-storage rental facilities, and industrial facilities in Canada. Its web site is here SmartCentres REIT.
The last stock I wrote about was about was Titanium Transportation Group Inc (TSX-TTNM, OTC-TTNMF) ... learn more. The next stock I will write about will be Cargojet Inc (TSX-CJT, OTC-CGJTF) ... learn more on Friday, September 8, 2023 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2023 learn more on Thursday, September 7, 2023 around 5 pm.
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