Is it a good company at a reasonable price? This is a REIT and therefore will probably be a good producer of income rather than growth. I like companies that provide a total return of 8%. This company does. I originally bought some REITs for diversification purposes. I did not buy this stock but acquired it when they took over CDN REIT. I have no intentions of selling it. Currently the price seems reasonable.
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 since I have had Choice REIT, I have earned a total return of 8.85 over 5.7 years, with 2.91% from capital gains and 5.48% from dividends. I go Choice because it bought out CDN REIT that I owned. My total return over some 17 years is 10.06% per year with 4.86% from capital gains and 5.20% 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 2023, after 10 years you would have received $562.64 in dividends. The stock would be worth $1,339.20. Your total return would have been $1,901.84. This would be a total return of 8.89% per year with 2.86% from capital gain and 6.03% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.52 | $1,009.92 | 96 | 10 | $562.64 | $1,339.20 | $1,901.84 |
The current dividend yield is good with dividend growth low and inconsistent. The current dividend yield is good (5% to 6% ranges) at 5.54%. The 5, 10 and historical dividend yields are also good at 5.42%, 5.54% and 5.42%. Grown in distributions is slow and irregular. The distributions have increased at a low rate (below 8%) at 0.22% per year for the past 5 years. There was only one increase in the past 5 years and that was in 2023 for 1.35%. The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is fine at 68% with 5 year coverage at 190%, but the DPR for AFFO and FFO are more important. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is fine at 90% with 5 year coverage at 91%. The DPR for 2023 for Funds from Operations (FFO) is good at 75% with 5 year coverage at 77%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 32% with 5 year coverage at 32%. The DPR for 2023 for Free Cash Flow 1 (FCF) is good at 38% with 5 year coverage fine at 64%. The DPR for 2023 for Free Cash Flow 2 (FCF) is good at 38% with 5 year coverage fine at 59%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 67.97% | 189.71% |
| AFFO | 90.49% | 90.56% |
| FFO | 74.61% | 76.79% |
| CFPS | 32.09% | 31.80% |
| FCF 1 | 38.17% | 63.95% |
| FCF 2 | 38.17% | 59.33% |
Debt Ratios are probably fine, but the company does have a lot of debt, but then REITs tend to have lots of debt. The Long Term Debt/Market Cap Ratio for 2023 is high at 0.66 but REITs usually have high debt levels. The Liquidity Ratio for 2023 is a good at 3.99. If you added in Cash Flow after dividends, the ratios are still good but lower at 2.10. The Debt Ratio for 2023 is low at 1.34 and I prefer this to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 too high at 3.96 and 2.96, but REITs do have a lot of debt.
| Type | Year End |
|---|---|
| Lg Term R | 0.66 |
| Intang/GW | 0.00 |
| Liquidity | 3.99 |
| Liq. + CF | 2.10 |
| Debt Ratio | 1.34 |
| Leverage | 3.96 |
| D/E Ratio | 2.96 |
The Total Return per year is shown below for years of 5 to 10 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 0.22% | 9.90% | 3.90% | 6.00% |
| 2013 | 10 | 1.42% | 8.89% | 2.86% | 6.03% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.77, 14.61 and 15.45. The corresponding 10 year ratios are 11.95, 13.19 and 14.44. The current P/E Ratio is 13.54 based on a stock price of $13.54 and EPS estimate for 2024 of $1.00. The current P/E ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 11.82, 13.94 and 16.00. The corresponding 10 year ratios are 11.55, 13.09 and 14.79. The current P/FFO Ratio is 13.15 based on a stock price of $13.54 and FFO estimate for 2024 of $1.03. The current P/E ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 14.34, 16.69 and 18.82. The corresponding 10 year ratios are 13.87, 15.75 and 17.74. The current P/AFFO Ratio is 14.56 based on a stock price of $13.54 and AFFO estimate for 2024 of $0.93. The current P/E ratio is between the low and median 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 $15.98. The 10-year low, median, and high median Price/Graham Price Ratios are 0.78, 0.88 and 0.99. The current P/GP Ratio is 0.85 based on a stock price of $13.54. The current P/E ratio is between the low and median 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 1.35. The current P/B Ratio is 1.23 based on a Book Value of $4,360M, Book Value per Share of $11.02 and a stock price of $13.54. 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.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.00. The current P/CF Ratio is 8.35 based on Cash Flow for the last 12 months of $642M, Cash Flow per Share of $1.62 and a stock price of $13.54. The current ratio is 39% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 5.42%. The current dividend yield is 5.54% based on dividends of $0.75 and a stock price of $13.54. The current dividend yield is 2.2% 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 5.54%. The current dividend yield is 5.54% based on dividends of $0.75 and a stock price of $13.54. The current dividend yield is at the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median.
The 10-year median Price/Sales (Revenue) Ratio is 7.13. The current P/S Ratio is 6.76 based on Revenue estimate for 2024 of $1,450M, Revenue per Share of $2.00. The current ratio is 5% 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 reasonable an at or below the median. The dividend tests are saying the stock price is reasonable and at or below the median. The P/S Ratio test confirms this. Most of the other testing is saying the stock price is reasonable and below or above the median.
When I look at analysts’ recommendations, I find Buy (4) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $14.88 with a high of $16.00 and a low of $13.00. The consensus price of 14.88 implies a total return of $15.44%, with 9.90% from capital gains and 5.54% from dividends.
On Stock Chase there are two entries for 2022 and they are both Buys. Stock Chase gives this stock 4 stars out of 5. It is not on my dividend lists. Kay Ng on Motley Fool says it is blue-chip for income, but do not expect much growth. Christopher Liew on Motley Fool says this is a good stock for your TFSA for earning income. The company put out a Press Release on their fourth quarter of 2023.
This article on Baystreet via Yahoo Finance talks about this REIT repurchasing shares. There was an article on in January 2023 on Tip Ranks . The authors explain why you should not buy this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street issues two warnings of interest payments are not well covered by earnings; and large one-off items impacting financial results
Choice Properties Real Estate Investment Trust invests in commercial retail, industrial, mixed-use, and residential 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 Nuvei Corp (TSX- NVEI, OTC- NVEI) ... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more on Friday, March 1, 2024 around 5 pm. Tomorrow on my other blog I will write about Retirement Mistakes.... learn more on Thursday, February 29, 2024 around 5 pm.
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