Is it a good company at a reasonable price? I have little in the way of investments in Western Canada. I still have faith I will make a reasonable return on my investment in this stock. I have not lost hope in it. The Trudeau family has always hated the west, especially Alberta. Maybe with a change in government in Ottawa this attitude will change. I plan to keep the shares I have. I do not have much invested in this stock. The price is relative cheap at present. I might buy more if it goes lower.
I own this stock of Melcor Developments Inc (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.
When I was updating my spreadsheet, I noticed I have had this stock for 17 years and I have a total return of 5.23% with 0.92% from capital gains and 4.31% from dividends. I bought stock in 2008 that I over paid for. If you look at the chart, the stock has been cyclical. It has two big peaks in 2007 and 2014 which it has yet to come close to since 2014.
I noticed that two of the Melton family sold shares over the past year. They were the CEO and Chairman, Timothy Charles Melton and an officer, Graeme Melton. I notice that the CFO bought shares in the past year.
If you had invested in this company in December 2014, for $1,002.15 you would have bought 51 shares at $19.65 per share. In December 2024, after 10 years you would have received $258.06 in dividends. The stock would be worth $657.90. Your total return would have been $915.96. This would be a total loss of 1.02%% per year with 4.12% from capital loss and 3.10% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.65 | $1,002.15 | 51 | 10 | $258.06 | $657.90 | $915.96 |
The current dividend yield is moderate with dividend growth negative currently. The current dividend yield is moderate (2% to 4% ranges) at 3.68%. The 5, 10 and historical median dividend yields are moderate at 3.68%, 3.69% and 2.96%. The dividends have declined over the past 5 years because of a dividend cut in 2024. Dividends have declined at 2.5% per year. The last dividend change was a dividend cut of 31% and it occurred in 2024.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 14% with 5 year coverage at 15%. The DPR for 2024 for Funds from Operations (FFO) is good at 14% with 5 year coverage at 21%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 16%. The DPR for 2024 for Free Cash Flow (FCF) is good at 24% with 5 year coverage at 28%. There is no agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 13.55% | 15.03% |
| FFO | 14.29% | 20.85% |
| CFPS | 14.23% | 15.78% |
| FCF | 23.80% | 28.34% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is high at 1.56 and currently at 1.63. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.44 and currently at 0.44 because this is a important ratio for a Real Estate company. The Liquidity Ratio for 2024 is good at 3.96 and 3.96 currently. The Debt Ratio for 2024 is good at 2.36 and 2.36 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.70 and 0.70 and currently at 1.70 and 0.70.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R+A | 0.44 | 0.44 |
| Lg Term R | 1.56 | 1.63 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 3.96 | 3.96 |
| Liq. + CF | 5.40 | 5.40 |
| Debt Ratio | 2.36 | 2.44 |
| Leverage | 1.70 | 1.70 |
| D/E Ratio | 0.70 | 0.70 |
The Total Return per year is shown below for years of 5 to 34 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 | -2.52% | 3.05% | -0.64% | 3.69% |
| 2014 | 10 | -2.72% | -1.02% | -4.12% | 3.10% |
| 2009 | 15 | 3.84% | 5.20% | 0.83% | 4.37% |
| 2004 | 20 | 6.71% | 10.84% | 4.75% | 6.09% |
| 1999 | 25 | 8.30% | 16.42% | 8.08% | 8.34% |
| 1994 | 30 | 9.36% | 20.22% | 8.90% | 11.32% |
| 1990 | 34 | 11.77% | 16.56% | 8.15% | 8.42% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.44, 7.03 and 8.91. The corresponding 10 year ratios are 8.29, 9.29 and 10.60. The corresponding historical ratios are 6.28, 7.25 and 8.43. The current P/E Ratio is 6.60 based on a stock price of $11.95 and EPS estimate for 2025 of $1.81. The 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 also have Fund from Operations (FFO) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.62, 4.86 and 6.16. The corresponding 10 year ratios are 6.24, 7.85 and 9.45. The current ratio is 3.88 based on FFO for the last 12 months of $3.08 and a stock price of $11.95. 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 Graham Price of $40.82. The 10-year low, median, and high median Price/Graham Price Ratios are 0.34, 0.37 and 0.45. The current P/GP Ratio is 0.29 base on a stock price of $11.95. 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 0.38. The current P/B Raito is 0.29 based on a stock price of $11.95, Book Value of 41,242.6M and Book Value per Share of $40.92. The current ratio is 23% 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 10.85. The current P/CF Ratio is 3.68 based on Cash Flow for the last 12 months of $98.6M, Cash Flow per Share of $3.25 and a stock price of $11.95. The current ratio is 65% 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 2.96%. The current dividend yield is 3.68% based on dividends of $0.44 and a stock price of $11.95. The current dividend yield is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.69%. The current dividend yield is 3.68% based on dividends of $0.44 and a stock price of $11.95. The current dividend yield is .03% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median. Note that this test works better on stocks that have increasing dividends. Dividends have recently been cut for this stock. Of course, a cut is dividends is not a positive move.
The 10-year median Price/Sales (Revenue) Ratio is 1.77. The current ratio is 1.21 based on Revenue estimate for 2025 of $300M, Revenue per Share of $9.88 and a stock price of $11.95. The current ratio is 32% 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. The historical dividend yield test says this. The 10 year dividend yield test just says that the stock price is reasonable, but dividends have been cut. recently. All the rest of the tests are saying that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Hold (1) recommendation. The consensus would be a Hold. 12 month target price consensus is $14.00. This implies a total return of $20.84% with 17.15% from capital gains and 3.68% from dividends.
The last entry for this stock on Stock Chase is 2016. This stock is not well followed. Adam Othman on Motley Fool says the company had a decent run up last year and it might be a stock to watch. Iain Butler at Motley Fool is a Motley Fool pick for long term promise and potential. The company put out a press release via Globe Newswire about their fourth quarter results for 2024.
Simply Wall Street via Yahoo Finance reviews this stock. They conclude it is not a good dividend stock due to unstable dividends. I have stats for last 34 year in which the company raised dividends 23 time and decreased them 6 times.
Simply Wall Street has 5 earnings of debt is not well covered by operating cash flow; unstable dividend track record; significant insider selling over the past 3 months; large one-off items impacting financial results; and profit margins (9.6%) are lower than last year (20%). Some members of the Melton family, who own a lot of shares, sold shares in the last year. The CFO bought shares in the past year with one purchase at around $12.25 and another at around $12.75 at the end of December 2024.
Melcor Developments Ltd is a real estate development company. It develops and manages mixed-use residential communities, business and industrial parks, office buildings, retail commercial centers, and golf courses. Its web site is here Melcor Developments Inc.
The last stock I wrote about was about was BCE Inc (TSX-BCE, NYSE-BCE) ... learn more. The next stock I will write about will be Goodfellow Inc (TSX-GDL, OTC-GFELF) ... learn more on Monday, April 7, 2025 around 5 pm.
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