Is it a good company at a reasonable price? If you buy this stock, it is best to hold in a RRSP or TFSA because the dividends are taxed as Interest Income. I expect the special dividends to decline in the near future because EPS is expected to decline. The company is keeping the regular dividend flat and giving out special dividends depending on how well the company does. It is a good way of doing things in an uncertain market. The stock price is currently cheap, probably because the analysts expect EPS to drop over the near term. I own this stock and I intend to keep this stock after this review.
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 the special dividends are declared in one year and paid in the next year in February. They are in the annual statements in the year they are declared, not in the year paid. Of course, what is unusual about this stock is that they have lots of special dividends. This company produces a lot of income, but not much in capital gains. The income from this company is classified at Interest Income, not Dividends.
If you had invested in this company in December 2013, for $1,008.12 you would have bought 93 shares at $10.84 per share. In December 2023, after 10 years you would have received $889.23 in dividends. The stock would be worth $978.36. Your total return would have been $1,867.59. This would be a total return of 8.53% per year with 0.30% from capital loss and 8.83% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.84 | $1,008.12 | 93 | 10 | $889.23 | $978.36 | $1,867.59 |
The current dividend yield is high with dividend growth low and with special dividends. The current dividend yield is high (7% and higher) at 7.96%. The 5, 10 and historical dividend yields are also high at 7.28%, 7.24% and 7.22%. The dividend increases are low. The 5 year growth for dividends is low (below 8% per year) at 0.04% per year.
The current total dividend yield is high (7% and higher) at 10.44%. The 5, 10 and historical total dividend yields are also high at 7.84%, 7.77% and 7.69%. Since 2018, all the dividend increases are for the special dividends. The 5 year growth for dividends and special dividends is low at 3.8% per year. Every year since 20174, this company has given out a special dividend. It is determined at the end of the year to be paid in the following year.
The Dividend Payout Ratios (DPR) are fine I think as the company is deliberately paying out a lot of their earnings as dividends. Most of the DPR calculations looks at dividends per share compared to EPS. However, sometimes this can give a distorted view of dividend and earnings. So, for this company, I looked a Net Income and total dividends paid and currently the percentage is 82% with current percentage at 85%. This is lower then the traditional DPR calculations below. The Special Dividend is still quite high for 2024 because it is based on how well the company did in 2023. I would expect the special dividend to be lower in 2025 because EPS is expected to decline in the near future.
The DPR for 2023 for Earnings per Share (EPS) is high at 99% with 5 year coverage at 97%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 63% with 5 year coverage at 70%. The DPR for 2023 for Free Cash Flow 2 (FCF) is fine at 55% with 5 year coverage at 60%. I got my Free Cash Flow values from 2 different sources.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 99.12% | 96.85% |
| Tot Div | 82.15% | 84.79% |
| CFPS | 62.93% | 69.85% |
| FCF 1 | 54.93% | 74.05% |
| FCF 2 | 54.93% | 59.92% |
Some Debt Ratios are good, but they do have a lot of debt. The Long Term Debt/Market Cap Ratio for 2023 is high at 0.81 and currently at 0.76. The Liquidity Ratio for 2023 is a good at 1.86 and 1.86 currently, but not important for financials. The Debt Ratio for 2023 is good at 2.22 and 2.22 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.82 and 0.82.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.81 | 0.76 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 1.86 | 1.86 |
| Liq. + CF | 7.36 | 6.83 |
| Debt Ratio | 2.22 | 2.22 |
| Leverage | 1.82 | 1.82 |
| D/E Ratio | 0.82 | 0.82 |
The Total Return per year is shown below for years of 5 to 14 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 | 3.79% | 4.80% | -3.53% | 8.00% |
| 2013 | 10 | 4.42% | 8.53% | -0.30% | 8.33% |
| 2009 | 14 | 6.81% | 1.17% | 5.44% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.69, 11.67 and 15.06. The corresponding 10 year ratios are 11.73, 12.56 and 13.56. The current P/E Ratio is 10.00 based on a Stock Price of $11.30 and EPS estimate for 2024 of $1.13. The current P/E Ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $16.70. The 10-year low, median, and high median Price/Graham Price Ratios are 0.74, 0.79 and 0.87. The current P/GP Ratio is 0.68 based on a stock price of $11.30. This 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 1.14. The current P/B Ratio is 1.03 based on a stock price of $11.30, Book Value of $482.2M and Book Value per Share of $10.97. The current ratio is 9.6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have a Book Value per Share estimate for 2024 of $11.00. This implies a ratio of 1.03 based on a stock price of $11.30 and Book Value of $483.6M. This ratio is 9.9% 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 10.57. The current P/CF Ratio is 6.43 based on a stock price of $11.30, Cash Flow for last 12 months of $77.3M and Cash Flow per Share of $1.76. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 7.22% for the regular dividends only. The current dividend yield is 7.96% based on dividends of $0.90 and a stock price of $11.30. The current dividend yield is 10% above the historical regular dividend. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 7.69% for the total dividends. The current dividend yield is 10.44% based on regular dividends of $0.90, special dividend of $0.28 and a stock price of $11.30. The current dividend yield is 36% above the historical total dividend. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 7.24% for the regular dividends only. The current dividend yield is 7.96% based on dividends of $0.90 and a stock price of $11.30. The current dividend yield is 10% above the 10 year regular dividend. 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 7.77% for the total dividends. The current dividend yield is 10.44% based on regular dividends of $0.90, special dividend of $0.28 and a stock price of $11.30. The current dividend yield is 34% above the 10 year total dividend. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 7.89. The current P/S Ratio is 5.07 based on Revenue estimate for 2024 of $97.9M, Revenue per Share of $2.23 and a stock price of $11.30. The current ratio is 36% 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. For the dividend tests, I really think you have to use the total dividend. Both the historical and 10 year dividend tests show the stock price as cheap. If you use the regular dividends, these tests show stock is reasonable but below the median. The P/S Ratio test is showing the stock price as cheap. Most of the rest of the testing is showing the stock price as cheap.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (1). The consensus would be a Strong Buy. The 12 months stock price consensus is $12.96 with a high of $13.42 and low of $12.50. The 12 month stock price consensus of $12.96 implies a total return of $25.13%, with 14.69% from capital gains and 10.44% from dividends.
Stock Chase. Stock Chase gives this stock 1 star out of 5. It is not on any of my current dividend lists. Christopher Liew on Motley Fool likes this stock for its dependable monthly payments. Adam Othman on Motley Fool likes this stock for its yield and that the dividends are financial sustainable.. The company put out a press release via Newsfile about its year end 2023 results.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has three warnings of earnings are forecast to decline by an average of 2.6% per year for the next 3 years; unstable dividend track record; and has a high level of debt. Simply Wall Street gives this stock 3 and one half stars out of 5. This is a low higher than for Stock Chase.
Atrium Mortgage Investment Corp is a mortgage investment corporation in Canada. The company is a provider of financing solutions to commercial real estate and development communities in urban centers in Ontario and Western Canada. The company generates its revenue from mortgage interest and fees and rental income. Its web site is here Atrium Mortgage Investment Corp.
The last stock I wrote about was about was Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more. The next stock I will write about will be TFI International Inc (TSX-TFII, OTC-TFIFF) ... learn more on Monday, March 4, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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