Is it a good company at a reasonable price? I bought this stock for diversification purposes and so I intend to keep this stock. A lot of REIT and Real Estate stocks have current problems left over from covid and the rapid increase in interest rates. This stock is currently testing as reasonable.
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 I have had this stock for 26 years. My total return is 9.21% with a capital loss of .18% and Dividends of 9.39%. I have done well over time, but this stock has not done well lately. There has been a lot of problems with real estate lately, and especially the companies recovering from covid shutdown. However, I buy for the long term and if you hold companies for the long term, they are bound to have problems times.
If you had invested in this company in December 2014, for $1,004.34 you would have bought 38 shares at $26.43 per share. In December 2024, after 10 years you would have received $483.84 in dividends. The stock would be worth $694.64. Your total return would have been $1,178.48. This would be a total return of 2.04% per year with 3.62% from capital loss and 5.66% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $26.43 | $1,004.34 | 38 | 10 | $483.84 | $694.64 | $1,178.48 |
The current dividend yield is good with dividend growth restarted. The current dividend yield is good (5% to 6% ranges) at 5.97%. The 5, 10 and historical dividend yields are also good at 5.37%, 5.47% and 6.35%. There was a big cut to the dividends in 2021 of 31%, but they did restart increases in 2022. The last dividend increase was this year and it was for 4.32%.
The Dividend Payout Ratios (DPR) are probably fine as REIT tend to have high payouts than other types of companies. The DPR for 2024 for Earnings per Share (EPS) is too high at 70% with 5 year coverage at 135%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is fine at 72% with 5 year coverage at 77%. The DPR for 2024 for Funds from Operations (FFO) is fine at 62% with 5 year coverage at 66%. The DPR for 2024 for Cash Flow per Share (CFPS) is too high at 108% with 5 year coverage at 76%. The DPR for 2024 for Free Cash Flow (FCF) is too high at107% with 5 year coverage at 85%. This is a REIT and its payouts have always been rather high.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 69.94% | 134.89% |
| AFFO | 72.70% | 76.63% |
| FFO | 62.08% | 66.49% |
| CFPS | 108.16% | 75.63% |
| FCF | 106.51% | 85.07% |
Debt Ratios are probably fine also, but the company does have a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is too high at 1.26 and currently at 1.19. The Liquidity Ratio for 2024 is good at 3.10 and 3.10 currently. The Debt Ratio for 2024 is good at 1.96 and 1.96 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.05 and 1.05 and currently at 2.05 and 1.05.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.26 | 1.19 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 3.10 | 3.10 |
| Liq. + CF | 3.42 | 3.32 |
| Debt Ratio | 1.96 | 1.96 |
| Leverage | 2.05 | 2.05 |
| D/E Ratio | 1.05 | 1.05 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | -5.16% | -2.46% | -7.34% | 4.87% |
| 2014 | 10 | -2.41% | 2.04% | -3.62% | 5.66% |
| 2009 | 15 | -1.47% | 6.42% | -0.55% | 6.97% |
| 2004 | 20 | -0.53% | 7.50% | 0.10% | 7.40% |
| 1999 | 25 | 0.24% | 14.70% | 3.04% | 11.66% |
| 1994 | 30 | 3.20% | 20.77% | 4.78% | 15.99% |
| 1993 | 31 | 13.75% | 3.14% | 10.61% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.31, 11.69, and 13.07. The corresponding 10 year ratios are 10.57, 11.65 and 12.73. The corresponding historical ratios are 10.82, 12.51 and 13.36. The current P/E Ratio is 9.61 based on a stock price of $19.41 and EPS estimate for 2025 of $2.02. The current 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 also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 10.81, 13.59 and 15.86. The corresponding 10 year ratios are 12.48, 18.49 and 16.06. The current P/AFFO Ratio is 12.77 based on a stock price of $19.41 and AFFO estimate for 2025 of $1.52. This 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 also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 9.34, 12.32 and 14.38. The corresponding 10 year ratios are 11.36, 13.02 and 14.97. The current P/FFO Ratio is 10.16 based on a stock price of $19.41 and FFO estimate for 2025 of $1.91. The current 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 $33.81. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 0.76 and 0.85. The current ratio is 0.57 based on a stock price of $19.41. The current 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 10-year median Price/Book Value per Share Ratio of 0.90. The current ratio is 0.77 based on a Book Value of $7,558M, Book Value per Share of $25.16 and a stock price of $19.41. The current ratio is 14% 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 14.52. The current P/CF Ratio is 15.42 based on Cash Flow for the last 12 months of $378M, Cash Flow per Share of $1.26 and a stock price of $19.41. The current ratio is 6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 6.35%. The current dividend yield is 5.97% based on dividends of $1.158 and a stock price of $19.41. 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. Note that dividends have gone down lately and this test works best when dividends are growing.
I get a 10 year median dividend yield of 5.47%. The current dividend yield is 5.97% based on dividends of $1.158 and a stock price of $19.41. The current dividend yield is 9% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. Note that dividends have gone down lately and this test works best when dividends are growing.
The 10-year median Price/Sales (Revenue) Ratio is 5.87. The current P/S Ratio is 4.92% based on Revenue estimate for 2025 of $1,186M, Revenue per Share of $3.95 and a stock price $19.41. The current ratio is 16% 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 dividend yield test says this. It is confirmed by the P/S Ratio test. Most of the other testing is saying the stock price is cheap to reasonable.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (5) and Hold (1). The consensus is a Strong Buy. The 12 months stock price consensus is $22.00 with a high of $23.00 and low of $21.00. The consensus stock price of $22.00 implies a total return of 19.31% with 13.34% from capital gains and 5.97% from dividend based on a current stock price of $19.41.
Stock Chase. Stock Chase gives this stock 5 stars out of 5. There are two analysts’ recommendations for 2025 and they both are buys. However, there were lots of concerns last year such as rising interest rates and their exposure to the condo market. Andrew Button on Motley Fool says to protect yourself from US tariffs, buy Canadian stocks like RioCan which has been growing lately. Demetris Afxentiou on Motley Fool says RioCan is a REIT to buy and hold forever. The company put out a Press Release on their fourth quarter of 2024 results.
Bay Street via Yahoo Finance looks to see if the dividend on this REIT is safe and says it is. Simply Wall Street gives this stock 3 and one half stars out of 5. They have two warnings out on this stock of interest payments are not well covered by earnings; and unstable dividend track record.
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 Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more. The next stock I will write about will be TFI International Inc (TSX-TFII, OTC-TFIFF) ... learn more on Wednesday, March 5, 2025 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks March 2025 learn more on Tuesday, March 4, 2025 around 5 pm.
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