Is it a good company at a reasonable price? This is certainly a good dividend paying stock. However, my favourites are dividend growth stocks and this is not one of those. People can certainly get good dividends from the stock and perhaps make a bit in capital gains. It has been volatile recently. Over the past 5 days it went from a low of $9.18 to $10.09 to currently $9.78. A recent report from Simply Wall Street says this company is worth $15.12 a share. My testing is showing the stock as reasonable.
I do not own this stock of Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF). I decided to investigate this stock after reading an article in the G&M in February 2012 about investing in small cap stocks that pay dividends. This was one of the stocks mentioned that I had never heard of before.
When I was updating my spreadsheet, I noticed that they had a dividend increase in 2024. This is the first one since 2006. I have 22 years of data and they have increased the dividends 4 times and decreased it 6 times. The rest of the time it was flat.
If you had invested in this company in December 2013, for $1,016.60 you would have bought 52 shares at $19.55 per share. In December 2023, after 10 years you would have received $507.00 in dividends. The stock would be worth $443.04. Your total return would have been $950.04. This would be a total loss of 0.93% per year with 7.97% from capital loss and 7.04% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.55 | $1,016.60 | 52 | 10 | $507.00 | $443.04 | $950.04 |
The current dividend yield is good with dividend growth negative. The current dividend yield is high (5% to 6% range) at 6.58%. the 5, 10 and historical median dividend yields are high (7% and above) at 8.41%, 7.16% and 8.19%. The dividends are high as this company was an income fund. Income Funds can have much higher dividends than corporations. Their dividends are also taxed differently (generally as part capital gains, dividends, other income etc.)
They cut their dividends in 2007 because of the change in laws about income trust. Then dividends were flat until 2019 when the cut the dividends again. They were flat until 2024 when they had their first increase. Dividends have declined by 13% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are currently good. The DPR for 2023 for Earnings per Share (EPS) is good at 39% with 5 year coverage non-calculable because of earnings losses. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is good at 40% with 5 year coverage at 47%. The DPR for 2023 for Distributable Cash Flow (DCF) is good at 25% with 5 year coverage at 55%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 22%. The DPR for 2023 for Free Cash Flow (FCF) is good at 27% with 5 year coverage at 40%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 39.47% | 0.00% |
| AFFO | 40.31% | 47.12% |
| DCF | 24.59% | 55.31% |
| CFPS | 13.97% | 22.39% |
| FCF | 24.18% | 40.05% |
Debt Ratios are fine, but debt is rather high. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.69 and currently at 0.70. The Liquidity Ratio for 2023 is too low at 0.80 and 0.40 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.60 and currently far too low at 0.58, but this is an estimate and it is a very low estimate. The Debt Ratio for 2023 is good at 1.50 and 1.52 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.98 and 1.98 and currently at 2.93 and 1.93. They have been paying off their debt recently.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.69 | 0.70 |
| Intang/GW | 0.54 | 0.49 |
| Liquidity | 0.80 | 0.40 |
| Liq. + CF | 1.60 | 0.58 |
| Debt Ratio | 1.50 | 1.52 |
| Leverage | 2.98 | 2.93 |
| D/E Ratio | 1.98 | 1.93 |
The Total Return per year is shown below for years of 5 to 22 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 | -12.94% | 3.79% | -4.06% | 7.84% |
| 2013 | 10 | -6.70% | -0.93% | -7.97% | 7.04% |
| 2008 | 15 | -4.52% | 13.01% | -0.12% | 13.14% |
| 2003 | 20 | -3.87% | 5.32% | -3.68% | 9.00% |
| 2001 | 22 | 0.87% | 12.63% | -1.45% | 14.08% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative, so I cannot use them in testing. The corresponding 10 year ratios are also negative and useless. The corresponding historical ratios are 8.71, 10.94 and 12.98. The current P/E Ratio is 10.28 based on a stock price of $10.03 and EPS estimate for 2024 of $0.98. This is a low ratio. It is between the low and median ratios of the historical median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, the historical median ratios are low because of all the negative ratios.
I also have Distributable Cash Flow (DCF) data. The 5-year low, median, and high median Price/ Distributable Cash Flow Ratios are 5.50, 8.60, 10.19. The corresponding 10 year ratios are 8.61, 10.47 and 12.19. The current ratio is 5.63 based on a stock price of $10.03 and DCF at 12 months to the second quarter of $1.78. The current ratio is below the low ratio for the 10 year median. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 4.09, 5.18 and 6.63. The corresponding 10 year ratios are 5.37, 6.40, and 7.87. The current ratio is 4.94 based on a stock price of $10.03 and AFFO at 12 months to the second quarter of $2.03. The current ratio is below the low ratio for the 10 year median. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $15.96. The 10-year low, median, and high median Price/Graham Price Ratios are 0.65, 0.80 and 0.95. The current P/GP Ratio is 0.63 based on a stock price of 10.03. This ratio is below the low ratio for 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 1.50. The current P/B Ratio is 1.58 based on a stock price of $10.03, Book Value of $744M, and Book Value per Share of $6.36. 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 a 10-year median Price/Cash Flow per Share Ratio of 6.08. The current P/CF Ratio is 5.14 based on Cash Flow per Share estimate for 2024 of $1.95, Cash Flow of $228.2M and a stock price of $10.03. The current ratio is 15% 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 8.19%. The current ratio is 6.58% based on a stock price of $10.03 and dividends of $.66. The current ratio is 19.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. Problem is that this stock used to be an income trust company and these companies can have very high dividend yields.
I get a 10 year median dividend yield of 7.16%. The current ratio is 6.58% based on a stock price of $10.03 and dividends of $.66. The current ratio is 8% below the 10 year 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 0.69. The current P/S Ratio is 0.67 based on Revenue estimate for 2024 of $1771.9M, Revenue per Share of $14.98 and a stock price of $10.03. The current ratio is 7.7% 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. The 10 year median dividend yield testing is saying this. This reasonable price is confirmed by the P/S Ratio test. My testing is showing the stock price as relatively cheap to reasonable and above and below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5), and Hold (1). The consensus is a Buy. The 12 month stock price consensus is $12.54 with a high of $14.00 and low of $10.50. The consensus stock price of $12.54 implies a total return of 31.61% with 25.02% from capital gains and 6.58% from dividends.
Six Analysts report on Stock Chase and 5 love the stock and the sixth one does not because of a low growth rate. Stock Chase gives this fund 4 stars out of 5. Amy Legate-Wolfe on Motley Fool loves the dividends on this stock. Aditya Raghunath on Motley Fool says buy Brookfield Asset Management (TSX-BAM) instead of this stock. He said that BAM is a dividend growth stock. Personally, I do not like any Brookfield stocks as they are very complex to analyze. When you get such complexity, it is easy to miss something important. The company reports on their 2023 results via Yahoo Finance. The company put out a press release via Morningstar about its second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock and thinks it is undervalue as they think it is worth $15.12 a share. Simply Wall Street gives out 4 warnings of earnings are forecast to decline by an average of 1% per year for the next 3 years; profit margins (7.8%) are lower than last year (12%); has a high level of debt; and unstable dividend track record. Simply Wall Street gives this stock 3 and one half stars out of 5.
Chemtrade Logistics Income Fund provides industrial chemicals and services to customers in North America and around the world. The company is organized into two operating segments: Sulphur Products & Performance Chemicals (SPPC) and Electrochemicals. Its geographical segments are Canada, the United States which derives maximum revenue, and South America. Its web site is here Chemtrade Logistics Income Fund.
The last stock I wrote about was about was Aecon Group Inc (TSX-ARE, OTC-AEGXF) ... learn more. The next stock I will write about will be Alimentation Couche-Tard Inc (TSX-ATD, OTC-ANCUF) ... learn more on Wednesday, August 21, 2024 around 5 pm. Tomorrow on my other blog I will write about Timeless Tips from Money Sense.... learn more on Tuesday, August 20, 2024around 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment