Is it a good company at a reasonable price? I bought this stock for diversification purposes as I own no real estate. The problem with stocks that pay high yields is that the is not much growth in dividends, but you do get a good return of passive income. At this point, it might be a speculative buy as it does have office Real Estate and there are problems in office Real Estate at this point in time. I plan to keep my shares in the stock for the same reasons I bought it.
I own this stock of RioCan Real Estate (TSX-REI.UN, OTC-RIOCF). I first bought this stock in 1998 because I wanted to diversify my portfolio into REITs. It was a stock covered and recommended by MPL Communications in their Income Trust coverage. Over the years I have made several more purchases of this REIT.
When I was updating my spreadsheet, I noticed that the value of my shares is depressed, but my total return is fine. I have had this stock since 1998, so for 26 years. I have made a number of purchases over the years. My total return is 9.16% with a capital loss of $0.40% and dividends at 9.56%. A lot of real estate stocks are currently depressed. Normally I would expect such stock to have a capital gain around 3% a year and the rest from distributions.
If you had invested in this company in December 2013, for $1,015.57 you would have bought 41 shares at $24.77 per share. In December 2023, after 10 years you would have received $354.54.21 in dividends. The stock would be worth $763.42. Your total return would have been $1,297.96. This would be a total return of 3.16% per year with 2.81% from capital loss and 5.98% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $24.77 | $1,015.57 | 41 | 10 | $534.54 | $763.42 | $1,297.96 |
The current dividend yield is good with dividend growth back after declining distributions. The dividend yield is good (5% to 6% ranges) at 6.15%. The 5, 10 and historical dividend yields are also good at 5.37%, 5.37% and 6.54%. The dividends have gone down over the past 5 years by 5.7% per year. After dividends were cut in 2021, the company started to raise them again in 2022. The last dividend increase was in 2024 and it was for 2.8%. The dividend payment is still 23% below payments made in 2020.
The important Dividend Payout Ratios (DPR) for AFFO and FFO are fine. The DPR for 2023 for Earnings per Share (EPS) is high at 823% with 5 year coverage at 117%, but the important DPRs is the AFFO and FFO. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is fine at 70% with 5 year coverage at 79%. The DPR for 2023 for Funds from Operations (FFO) is fine at 60% with 5 year coverage at 70%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 65% with 5 year coverage at 74%. The DPR for 2023 for Free Cash Flow (FCF) 1 cannot be calculated because of negative FCF with 5 year coverage high at 913%. The DPR for 2023 for Free Cash Flow (FCF) 1 cannot be calculated because of negative FCF with 5 year coverage high at 90%. There are often differences in how different companies calculate the FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 823.08% | 116.63% |
| AFFO | 69.93% | 79.15% |
| FFO | 60.45% | 69.71% |
| CFPS | 65.00% | 74.24% |
| FCF 1 | N/C | 912.88% |
| FCF 2 | N/C | 90.17% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is too high at 1.07 and currently at 1.09. The Liquidity Ratio for 2023 is good at 2.81. The Debt Ratio for 2023 is good at 2.00. The Leverage and Debt/Equity Ratios for 2023 are good at 2.00 and 1.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.07 | 1.09 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 2.81 | 2.81 |
| Liq. + CF | 3.29 | 3.21 |
| Debt Ratio | 2.00 | 2.00 |
| Leverage | 2.00 | 2.00 |
| D/E Ratio | 1.00 | 1.00 |
The Total Return per year is shown below for years of 5 to 30 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 | -5.73% | 0.73% | -4.79% | 5.52% |
| 2013 | 10 | -2.70% | 3.16% | -2.81% | 5.98% |
| 2008 | 15 | -1.59% | 11.03% | 2.09% | 8.95% |
| 2003 | 20 | -0.32% | 9.11% | 0.99% | 8.13% |
| 1998 | 25 | 0.48% | 13.43% | 2.77% | 10.66% |
| 1993 | 30 | 3.19% | 13.80% | 3.31% | 10.49% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.38, 10.43 and 12.17. The corresponding 10 year ratios are 11.25, 12.06 and 12.87. The corresponding historical ratios are 13.73, 12.67, and 15.27. The current P/E Ratio is 10.26 based on a stock price of $18.05 and EPS estimate for 2024 of $1.76. 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 Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 10.26, 12.56 and 14.86. The corresponding 10 year ratios are 12.32, 13.46 and 15.14. The current P/FFO Ratio is 10.08 based on a stock price of $18.05 and FFO estimate for 2024 of $1.79. 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 11.32, 14.48 and 16.25. The corresponding 10 year ratios are 13.41, 14.77 and 16.68. The current P/AFFO Ratio is 12.28 based on a stock price of $18.05 and AFFO estimate for 2024 of $1.47. 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 $28.61. The 10-year low, median, and high median Price/Graham Price Ratios are 0.75, 0.80 and 0.88. The current P/GP Ratio is 0.63 based on a stock price of $18.05. 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 0.94. The current P/B Ratio is 0.73 based on a Book Value of $7,438M, Book Value per Share of $24.76 and a stock price of $18.05. The current ratio is 22% below the 10 year median ratio. 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 14.94. The current P/CF Ratio is 14.07 based on Cash Flow for the last 12 months of $386M, Cash Flow per Share of $1.28 and a stock price of $18.05. The current ratio is 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 6.54%. The current dividend yield is 6.15% based on dividends of $1.11. The current dividend yield is 6% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 5.37%. The current dividend yield is 6.15% based on dividends of $1.11. The current dividend yield is 15% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 6.32. The current P/S Ratio is 4.68 based on Revenue estimate for 2024 of $1,160M, Revenue per Share of $3.86 and a stock price of $18.05. The current ratio is 26% 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 reasonable and may even be cheap. The 10 year dividend yield is test is showing the stock price as reasonable and below the median. However, this test is best for dividend growth stocks and this stock has recently cut dividends. The P/S Ratio testing 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 (4), Buy (5) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $21.62, with a high of $24.00 and low of $19.00. The consensus price of $21.62 implies a total return of $25.93% with 19.78% from capital gains and 6.15% from dividends.
There are four recommendations onStock Chase for 2023, two are a Buy and two are Do Not Buy. Stock Chase gives this stock 3 stars out of 5. There is a problem in the Real Estate sector re Offices. Demetris Afxentiou on Motley Fool thinks this is a good stock for passive income. Aditya Raghunath on Motley Fool thinks this stock is a solid long term investment.. The company put out a Press Release for year-end 2023.
Vancouver Island Guy on Twitter talks about this stock. Simply Wall Street gives this stock 2 and one half stars out of 5. It lists 4 warnings of debt is not well covered by operating cash flow; profit margins (3.3%) are lower than last year (19.2%); unstable dividend track record; and large one-off items impacting financial results.
RioCan Real Estate Investment Trust is a Canadian real estate investment trust which owns, develops, and operates Canada's portfolio of retail-focused, increasingly mixed-use properties. The REIT's property portfolio includes shopping centers and mixed-use developments, with majority of its properties located in Ontario, Canada. RioCan’s tenants consist of grocery stores, supermarkets, restaurants, cinemas, pharmacies, and corporates. Its web site is here RioCan Real Estate.
The last stock I wrote about was about was Bombardier Inc (TSX-BBD.B, OTC-BDRBF) ... learn more. The next stock I will write about will be H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) ... learn more on Friday, March 15, 2024 around 5 pm. Tomorrow on my other blog I will write about Canadian Banks .... learn more on Thursday, March 14, 2024 around 5 pm.
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