I am today reviewing this stock, (TSX-CNR) because it has published its fourth quarterly results and I own this stock. I have owned this stock since 2005 and I have made a return of 12.2% per year on my shares. I have not had this stock for long, so I am only earning 2.8% return on my original investment. However, when you hold this stock for something like 10 years, you could be earning around 8% on your original investment.
One of the nice things about this stock is that the dividends have also been increased during the recent recession. The increases for the last few years have been just under 10%. The 5 year increase in dividends has been just over 20% per year. So, this stock has been rewarding people who invest for the long term. The 10 year growth in dividends is almost as good, coming in at 17.6% per year.
The growth figures on this stock for the financial year ending in 2009 are a mixed bag. Most of the 10 years growth figures are better than the 5 year growth figures. This is because we are just coming out of a recession, so it is not unusual. For example, the growth in cash flow from operations has increased only 1.5% per year over the last 5 years, but it has increased by 8.7% per year over the last 10 years.
Earnings on this stock have been much better. The growth in earnings for the last 5 and 10 years has been over 12% per year. The growth in Total Returns has also been very good. For the last 5 years, it has been 10.9% per year. For the last 10 years, it has been even better at 17.9% per year.
The next thing to talk about is the Asset/Liability Ratios. First, the Liquidity ratio has improved lately and is now higher than either the 5 year or 10 year average. This ratio for the financial year ending in 2009 is 1.20. The 5 and 10 year averages were 0.80 and 0.72. The Asset/Liability Ratios have always been higher and much better. The current ratio is 1.81. This is also higher than the 5 and 10 year averages. The last thing to talk about is the Return on Equity. This has been quite good, even lately. The 5 year average is 18.6%. The ROE for 2009 is a bit lower, but is still good at 16.5%.
I have been pleased with my investment in this stock and will continue to how what stock I own. Tomorrow I will talk about what the analyst say and whether or not the current stock price is good.
Canadian National Railway Company and its operating railway subsidiaries, spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America. Its web site is www.cn.ca/. See my spreadsheet at www.spbrunner.com/stocks/cnr.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
I have also updated my index spreadsheet and it is at index portfolio.
Monday, March 1, 2010
Friday, February 26, 2010
Dividends and Special Dividends
Jennifer Dowty wrote a column Dividend Paying stocks that I found very interesting. Jennifer is Associate Vice President and Portfolio Manager MFC Global Investment Management of Manulife. See her Bio. The title of the article in Investor’s Digest was Dividend Stocks: Buy, Hold and Collect. The Investor’s Digest is a publication of MPL Communications. See publications on their site.
Her picks were stocks that not only increased their dividends, but also have special dividends. She said she screened over 600 companies to come up with 12 picks. There are only 3 on this list that I know about and have reviewed. Over the next while, I will be doing spreadsheets on these stocks and reviewing them.
Special dividends are great, because they can add considerably to the return you receive on a stock. However, there can be problems with them. The first is that you cannot depend on them. The problem maybe just as you really need them, they are not paid. Special dividends are only paid if a company can afford to pay them. Therefore, the chances they will not be paid in a recession are quite large.
The following were Jennifer’s picks: Armtec Infrastructure Income Fund (TSX-ARF.UN), Computer Modelling Group Ltd. (TSX-CMG), First National Financial Income Fund (TSX- FN.UN), Genivar Income Fund (TSX-GNV.UN), Gluskin Sheff + Associates Inc. (TSX- GS), Keyera Facilities Income Fund (TSX-KEY.UN), Le Chateau Inc (TSX-CTU.A), MCAN Mortgage Corporation (TSX-MKP), McGraw-Hill Ryerson Ltd (TSX-MHR), North West Company Fund (TSX-NWF.UN), and ShawCor Ltd. TSX-(SCL.A).
Dividends are often paid based on earnings or cash flow. For example, a company decides to pay out a certain percentage of its earnings. This can cause dividends to rise quite substantially in good times. The problem also is that in bad times, the increases are lower or non-existent. Dividends could also be lowered or stopped. If you have been following my blog, you would have seen dividends in the first year of our current trouble increase still quite well. However, in 2009, dividends increases were much fewer and some of my company’s lowered or temporarily stopped their dividends.
Other things can affect dividend payouts as well. The most common is the Asset/Liability Ratios being too low. Often when companies borrow money, they sign debt covenants. Basically, they agree to have A/L ratios at a particular level. That preferred ratio is usually 1.50, but it could also be at another ratio. That is why I show Liquidity (Current Asset/Current Liability) and Asset/Liability Ratios on my spreadsheets. A low ratio can affect the payment of dividends.
Another thing that could affect dividends or their increases is that the company needs money for some reason. It could be that they want to expand their business or they might want to update or need to repair some existing facilities. If you are depending on dividends you should paid some attention to a company’s announcements and also read some of their annual statements that refer to future intentions.
It is great to review someone else’s picks. You never know what gems might appear. Besides, the world continuously changes. In 50 years time, what are great stocks now might no longer exist. Same as the stocks of 50 years ago, few are around or are the same anymore.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Her picks were stocks that not only increased their dividends, but also have special dividends. She said she screened over 600 companies to come up with 12 picks. There are only 3 on this list that I know about and have reviewed. Over the next while, I will be doing spreadsheets on these stocks and reviewing them.
Special dividends are great, because they can add considerably to the return you receive on a stock. However, there can be problems with them. The first is that you cannot depend on them. The problem maybe just as you really need them, they are not paid. Special dividends are only paid if a company can afford to pay them. Therefore, the chances they will not be paid in a recession are quite large.
The following were Jennifer’s picks: Armtec Infrastructure Income Fund (TSX-ARF.UN), Computer Modelling Group Ltd. (TSX-CMG), First National Financial Income Fund (TSX- FN.UN), Genivar Income Fund (TSX-GNV.UN), Gluskin Sheff + Associates Inc. (TSX- GS), Keyera Facilities Income Fund (TSX-KEY.UN), Le Chateau Inc (TSX-CTU.A), MCAN Mortgage Corporation (TSX-MKP), McGraw-Hill Ryerson Ltd (TSX-MHR), North West Company Fund (TSX-NWF.UN), and ShawCor Ltd. TSX-(SCL.A).
Dividends are often paid based on earnings or cash flow. For example, a company decides to pay out a certain percentage of its earnings. This can cause dividends to rise quite substantially in good times. The problem also is that in bad times, the increases are lower or non-existent. Dividends could also be lowered or stopped. If you have been following my blog, you would have seen dividends in the first year of our current trouble increase still quite well. However, in 2009, dividends increases were much fewer and some of my company’s lowered or temporarily stopped their dividends.
Other things can affect dividend payouts as well. The most common is the Asset/Liability Ratios being too low. Often when companies borrow money, they sign debt covenants. Basically, they agree to have A/L ratios at a particular level. That preferred ratio is usually 1.50, but it could also be at another ratio. That is why I show Liquidity (Current Asset/Current Liability) and Asset/Liability Ratios on my spreadsheets. A low ratio can affect the payment of dividends.
Another thing that could affect dividends or their increases is that the company needs money for some reason. It could be that they want to expand their business or they might want to update or need to repair some existing facilities. If you are depending on dividends you should paid some attention to a company’s announcements and also read some of their annual statements that refer to future intentions.
It is great to review someone else’s picks. You never know what gems might appear. Besides, the world continuously changes. In 50 years time, what are great stocks now might no longer exist. Same as the stocks of 50 years ago, few are around or are the same anymore.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Thursday, February 25, 2010
BCE Inc 2
I am today reviewing this stock, (TSX-BCE) because it has published its fourth quarterly results. I am using their unaudited statements for December 31, 2009. BCE was one of the first stocks I bought. This stock is hard to get a long term rate of growth. The main problem is that in 2000 they split off their investment in Nortel. At that time, Nortel’s and also BCE’s stock price was very high. I sold off half of Nortel at a very good price and half at a very low price. If I put BCE and Nortel together in Quicken, I get a long term return of 12.7% per year since 1987. 1987 is the year I started to track my investments on Quicken.
The most encourage thing is there is insider buying. Over this last year, Insider Buying totaled just over $1M. There is also Insider Buying under the company’s ownership plan. There is no Insider Selling that I could see. The other think that shows the company has faith in the immediate future of this company is the rise in dividends. Around the time that this company was to go private in 2008, there was a decrease in total dividends as only two dividends, instead of 4 were paid in 2008. However, since that time there has been two dividend increases. This is certainly better than a lot of other company’s have managed during our recent difficulties.
When I look at the 5 year average P/E low, I get a ratio of 12 and for the 5 year average P/E high, I get 18. Currently, the P/E is 11, based on expected earnings for 2010. Sites that base current P/E on the latest 12 months earnings get a P/E of 14. I feel that a P/E of 11 is both good from an absolute view and from a relative view. When I look at the Price/Book Value ratio, I see that it is less than 70% of the long term average. Also at 1.34, it is low.
Next, I want to look at dividend yield. The current yield is 5.9% and the 5 year average is 4.6%. So on this basis, the current yield is good. The last thing I like to check is the Graham Price. I get a current Graham Price of $36.28. The current price of $29.18 is some 24% below this Graham Price. I probably should point out, again, that the P/E and Graham Price are based on an estimate of 2010 earnings. Estimates can be wrong. Both the P/BV and the dividend yield are based on actual current values and therefore are more reliable. If you look at all this stuff, it would appear the current stock price is good.
When I look at analysts’ recommendations, I find them at Strong Buy, Buy, Hold, Underperform and Sell. So, analysts’ thoughts about this stock run the whole gamete. There are lots of Strong Buys, Buys and Holds. I only find a couple of Underperform and one Sell. The consensus is probably a Buy, but I do not think that you can ignore the large amount of Hold recommendations, nor the huge diversity of opinion on this stock.
What a lot of analysts like is the dividend. They believe that now the buyout is done with, BCE will go back to the practice of raising their dividends on a regular basis. People really seem to like George Cope and feel that BCE will very well under him. The main problem cited is wireless competition, both for BCE’s landlines and current or possibly future wireless rivals.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is www.bce.ca/. See my spreadsheet at www.spbrunner.com/stocks/bce.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
The most encourage thing is there is insider buying. Over this last year, Insider Buying totaled just over $1M. There is also Insider Buying under the company’s ownership plan. There is no Insider Selling that I could see. The other think that shows the company has faith in the immediate future of this company is the rise in dividends. Around the time that this company was to go private in 2008, there was a decrease in total dividends as only two dividends, instead of 4 were paid in 2008. However, since that time there has been two dividend increases. This is certainly better than a lot of other company’s have managed during our recent difficulties.
When I look at the 5 year average P/E low, I get a ratio of 12 and for the 5 year average P/E high, I get 18. Currently, the P/E is 11, based on expected earnings for 2010. Sites that base current P/E on the latest 12 months earnings get a P/E of 14. I feel that a P/E of 11 is both good from an absolute view and from a relative view. When I look at the Price/Book Value ratio, I see that it is less than 70% of the long term average. Also at 1.34, it is low.
Next, I want to look at dividend yield. The current yield is 5.9% and the 5 year average is 4.6%. So on this basis, the current yield is good. The last thing I like to check is the Graham Price. I get a current Graham Price of $36.28. The current price of $29.18 is some 24% below this Graham Price. I probably should point out, again, that the P/E and Graham Price are based on an estimate of 2010 earnings. Estimates can be wrong. Both the P/BV and the dividend yield are based on actual current values and therefore are more reliable. If you look at all this stuff, it would appear the current stock price is good.
When I look at analysts’ recommendations, I find them at Strong Buy, Buy, Hold, Underperform and Sell. So, analysts’ thoughts about this stock run the whole gamete. There are lots of Strong Buys, Buys and Holds. I only find a couple of Underperform and one Sell. The consensus is probably a Buy, but I do not think that you can ignore the large amount of Hold recommendations, nor the huge diversity of opinion on this stock.
What a lot of analysts like is the dividend. They believe that now the buyout is done with, BCE will go back to the practice of raising their dividends on a regular basis. People really seem to like George Cope and feel that BCE will very well under him. The main problem cited is wireless competition, both for BCE’s landlines and current or possibly future wireless rivals.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is www.bce.ca/. See my spreadsheet at www.spbrunner.com/stocks/bce.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Wednesday, February 24, 2010
BCE Inc
I am today reviewing this stock, (TSX-BCE) because it has published its fourth quarterly results. I am using their unaudited statements for December 31, 2009. The problem with unaudited statements, such as with BCE’s, is that they do not always put them into the normal format. I could not find everything I wanted. There are items in the spreadsheets that are in purple, and this is because I am unsure of my data.
BCE was one of the first stocks I bought. This stock is hard to get a long term rate of growth. The main problem is that in 2000 they split off their investment in Nortel. At that time, Nortel’s and also BCE’s stock price was very high. I sold off half of Nortel at a very good price and half at a very low price. If I put BCE and Nortel together in Quicken, I get a long term return of 12.7% per year. However, this stock has certainly not performed well over the last 5 and 10 years. My spreadsheet shows return of just 3.5% per year over the last 10 years and 4.5% per year over the past 5 years. This is probably very realistic. BCE will probably do better in the next while. They have just announced a dividend increase of over 7%.
A lot of the growth figures are really bad. The bright point is that the dividends growth for the 5 years ending in 2009 was 5.7%, and the book value growth for the same period is over 10% per year. George Cope is the CEO of BCE and many feel that he will do a very good job. There is a news item that Report on Business is doing an article on BCE in their March 2010 issue due to be on the stands on February 26th, 2010.
The Liquidity Ratio is low at 0.69, but this is typical of this company and other retail stocks. The Asset/Liability ratio is very health at 1.90. I also get a negative Accrual Ratio and this is good. The thing about the Accrual Ratio is that I am not sure of some of the figures I got from the unaudited report. I guess the last thing to talk about is the Return on Equity. The ROE came in at 9.5% for 2009 and this is not bad. It is better than the one for 2008, which was 6.5%. The 5 year average for the ROE is 15% and it is expected that 2010 will be a better year.
BCE is currently less than 1% of by portfolio, so it does not count for much. I used to have more money in telecommunications stocks, but I currently wonder about the long term profitability of this sector. We, in Canada, currently have very high rates for cell phones and cable and I wonder if there is not going to be problems for these companies in the future. I will continue to hold the BCE stock I own. Tomorrow, I will talk about what the analysts say about this stock and if the current stock price is good.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is www.bce.ca/. See my spreadsheet at www.spbrunner.com/stocks/bce.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
BCE was one of the first stocks I bought. This stock is hard to get a long term rate of growth. The main problem is that in 2000 they split off their investment in Nortel. At that time, Nortel’s and also BCE’s stock price was very high. I sold off half of Nortel at a very good price and half at a very low price. If I put BCE and Nortel together in Quicken, I get a long term return of 12.7% per year. However, this stock has certainly not performed well over the last 5 and 10 years. My spreadsheet shows return of just 3.5% per year over the last 10 years and 4.5% per year over the past 5 years. This is probably very realistic. BCE will probably do better in the next while. They have just announced a dividend increase of over 7%.
A lot of the growth figures are really bad. The bright point is that the dividends growth for the 5 years ending in 2009 was 5.7%, and the book value growth for the same period is over 10% per year. George Cope is the CEO of BCE and many feel that he will do a very good job. There is a news item that Report on Business is doing an article on BCE in their March 2010 issue due to be on the stands on February 26th, 2010.
The Liquidity Ratio is low at 0.69, but this is typical of this company and other retail stocks. The Asset/Liability ratio is very health at 1.90. I also get a negative Accrual Ratio and this is good. The thing about the Accrual Ratio is that I am not sure of some of the figures I got from the unaudited report. I guess the last thing to talk about is the Return on Equity. The ROE came in at 9.5% for 2009 and this is not bad. It is better than the one for 2008, which was 6.5%. The 5 year average for the ROE is 15% and it is expected that 2010 will be a better year.
BCE is currently less than 1% of by portfolio, so it does not count for much. I used to have more money in telecommunications stocks, but I currently wonder about the long term profitability of this sector. We, in Canada, currently have very high rates for cell phones and cable and I wonder if there is not going to be problems for these companies in the future. I will continue to hold the BCE stock I own. Tomorrow, I will talk about what the analysts say about this stock and if the current stock price is good.
BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is www.bce.ca/. See my spreadsheet at www.spbrunner.com/stocks/bce.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Tuesday, February 23, 2010
Organic Resource Management
I am today reviewing of Organic Resource Management (CVE-ORI) as I have not reviewed this stock since October 2008. This is a small cap stock I bought after I had read an article about buying small cap stocks. The theory in the article being that you should buy a basket of small caps of at least 5 stocks. If you had 2 winners and 3 losers, you could do well. Stocks can only lose the money you pay for them, but their gains can be, theoretically, unlimited. I do not have much left from the stocks I bought.
I still have this one because it is worth only amount $30.00 and I have less than a board lot of these shares. The reason I have below 100 shares is because they did a 20 to 1 reverse split. This sounded like a good industry to be in when I bought this stock in 1997, but I have lost some 22% per year on this stock. Good job I did not invest much. This stock made money in 1997 and only in two years since then. They made money in 1999 and 2009. It looks like they will make money this year also. Last year’s earnings of $.37 were only that good because of the sale of assets, so this year’s earnings should be lower, but still positive.
First, I should state that the financial year for this company ends June 30th each year. To talk about growth figures on this stock would not go any where. However, between 2008 and 2009, there was growth in Revenues, Earnings, Cash Flow and Book Value. This is positive. There is also expected to be growth in all these items except earnings between 2009 and 2010. See the above paragraph for remarks on earnings.
One positive item on this stock is that there has been steady insider buying of this stock over the past year. There are also other things. For instance, the Liquidity Ratio and the Asset/Liability Ratio are both above 1.50. The Liquidity Ratio is now 1.79 and the Asset/Liability Ratio is 2.76. This means that there is no problem with the assets covering their liabilities. Also, I get a Graham Price of $2.44, which is almost 50% above the current price and the Accrual Ratio is a great -13%.
Would I recommend anyone purchasing this stock? If you are small caps, you might be interested. I have moved on from small caps and probably will not be purchasing any more. However, perhaps some day, what I have in this stock might be worthwhile to sell.
The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is www.ormi.com/ormi/. See my spreadsheet at www.spbrunner.com/stocks/ori.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter at http://twitter.com/spbrunner.
I still have this one because it is worth only amount $30.00 and I have less than a board lot of these shares. The reason I have below 100 shares is because they did a 20 to 1 reverse split. This sounded like a good industry to be in when I bought this stock in 1997, but I have lost some 22% per year on this stock. Good job I did not invest much. This stock made money in 1997 and only in two years since then. They made money in 1999 and 2009. It looks like they will make money this year also. Last year’s earnings of $.37 were only that good because of the sale of assets, so this year’s earnings should be lower, but still positive.
First, I should state that the financial year for this company ends June 30th each year. To talk about growth figures on this stock would not go any where. However, between 2008 and 2009, there was growth in Revenues, Earnings, Cash Flow and Book Value. This is positive. There is also expected to be growth in all these items except earnings between 2009 and 2010. See the above paragraph for remarks on earnings.
One positive item on this stock is that there has been steady insider buying of this stock over the past year. There are also other things. For instance, the Liquidity Ratio and the Asset/Liability Ratio are both above 1.50. The Liquidity Ratio is now 1.79 and the Asset/Liability Ratio is 2.76. This means that there is no problem with the assets covering their liabilities. Also, I get a Graham Price of $2.44, which is almost 50% above the current price and the Accrual Ratio is a great -13%.
Would I recommend anyone purchasing this stock? If you are small caps, you might be interested. I have moved on from small caps and probably will not be purchasing any more. However, perhaps some day, what I have in this stock might be worthwhile to sell.
The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is www.ormi.com/ormi/. See my spreadsheet at www.spbrunner.com/stocks/ori.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter at http://twitter.com/spbrunner.
Monday, February 22, 2010
Investing In What You Do Not Know
Personally, I do not think that you should be investing in Mutual Funds or ETFs without an understanding of how stocks and bonds work. I would think that the best why of gaining knowledge is to invest in some stocks or bonds, even if on a very small scale. Some people can read to understand these investment vehicles of finance, but hands-on practice is still probably a necessity. There is nothing like practical experience to learn something.
It is not so much that you should not invest in what you cannot afford to lose, but what you cannot afford to lose in the short term. There is going to be fluctuations in the short term. You should plan on a 3 – 5 year period to exit a Mutual Fund or ETF portfolio. So, if you are retiring in 3 – 5 years, you should be putting into cash the money you will need at retirement. I live off my dividends, so I have cash and future dividends to last roughly 5 years. The interest on cash and MMF funds could make you cry. However, this is better than having to sell assets at a loss because you need the money to live on.
I have talked to a lot of people who have invested in Mutual Funds and ETFs because they do not understand the underlying assets. They seem to think that all gains made is due to them, but all loses are a catastrophe and are someone else’s fault. They wonder where their money has gone, but they never asked where it came from when the value of their assets went up. Markets normally fluctuate. The capitalistic market place is boom and bust. It has always been. It may have been caused by stupidity in Wall Street this time, but if it were not, the bust would have been caused by something else. This is also looking at investing in the wrong light. What you need to look at is the long term, and in the long term, equity investment is good.
And, there is nothing wrong with investing in Mutual Funds. (I would not do this personally, but that is another story.) The point is if you are not willing to do the work to properly invest the money yourself, the next best thing is to pay someone else to do your investing. What I disagree with, is for a person to allow someone else to invest for them into something they do not understanding. If they had at least some understanding, the current recession would not have been a surprise. Recessions are common. We have them all the time. With any sort of historical perspective, investors would know that.
My guess is that most people, who are complaining about losing money in this latest recession, invested in things they knew nothing about. If you cannot afford the risk of the whole market, you should be in stock that used to be called “widows and orphan” stock. I do not believe they still exist, but you can buy conservative, dividend paying stock. They would be low risk stock from well know firms that pay good dividends. These are unexciting stock and they are generally ignored, especially in bull markets. Most mutual fund companies call funds containing these stocks “Income Funds”. I do not know why, but they do.
So, please, if you are investing in Mutual Funds and ETFs, get some education about what it is you are investing in. Do no invest with no knowledge and then whine about your investment when things go wrong. It is annoying. But I guess the real problem is, I have heard this all before. Every recession it is the same whine about investments going sour.
It seems to be every decade we have a recession and every time people who have invested in what they do not understand whine about how it is not their fault they lost money, it is someone else’s fault. If investors learn nothing in this recession and do not take responsibility for their investments, I will hear the same whine in the next recession also. It is annoying.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
It is not so much that you should not invest in what you cannot afford to lose, but what you cannot afford to lose in the short term. There is going to be fluctuations in the short term. You should plan on a 3 – 5 year period to exit a Mutual Fund or ETF portfolio. So, if you are retiring in 3 – 5 years, you should be putting into cash the money you will need at retirement. I live off my dividends, so I have cash and future dividends to last roughly 5 years. The interest on cash and MMF funds could make you cry. However, this is better than having to sell assets at a loss because you need the money to live on.
I have talked to a lot of people who have invested in Mutual Funds and ETFs because they do not understand the underlying assets. They seem to think that all gains made is due to them, but all loses are a catastrophe and are someone else’s fault. They wonder where their money has gone, but they never asked where it came from when the value of their assets went up. Markets normally fluctuate. The capitalistic market place is boom and bust. It has always been. It may have been caused by stupidity in Wall Street this time, but if it were not, the bust would have been caused by something else. This is also looking at investing in the wrong light. What you need to look at is the long term, and in the long term, equity investment is good.
And, there is nothing wrong with investing in Mutual Funds. (I would not do this personally, but that is another story.) The point is if you are not willing to do the work to properly invest the money yourself, the next best thing is to pay someone else to do your investing. What I disagree with, is for a person to allow someone else to invest for them into something they do not understanding. If they had at least some understanding, the current recession would not have been a surprise. Recessions are common. We have them all the time. With any sort of historical perspective, investors would know that.
My guess is that most people, who are complaining about losing money in this latest recession, invested in things they knew nothing about. If you cannot afford the risk of the whole market, you should be in stock that used to be called “widows and orphan” stock. I do not believe they still exist, but you can buy conservative, dividend paying stock. They would be low risk stock from well know firms that pay good dividends. These are unexciting stock and they are generally ignored, especially in bull markets. Most mutual fund companies call funds containing these stocks “Income Funds”. I do not know why, but they do.
So, please, if you are investing in Mutual Funds and ETFs, get some education about what it is you are investing in. Do no invest with no knowledge and then whine about your investment when things go wrong. It is annoying. But I guess the real problem is, I have heard this all before. Every recession it is the same whine about investments going sour.
It seems to be every decade we have a recession and every time people who have invested in what they do not understand whine about how it is not their fault they lost money, it is someone else’s fault. If investors learn nothing in this recession and do not take responsibility for their investments, I will hear the same whine in the next recession also. It is annoying.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Friday, February 19, 2010
Canadian Tire Corp 2
I am today continuing my review of Canadian Tire Corp (TSX-CTC.A); because I own it and the unaudited statements for the financial year, ending January 2, 2010 has been published. I first bought this stock in February 2000. On this stock, I have made a return of 10.8% per year. I bought some more shares in June 2009 and on my total investment, I have made a return of 10.7% per year.
The first thing I always check is the Insider Buying and Insider Selling on the stock. The good news is that in the past year there has been some $4M of Insider Buying. However, there also has been some Insider Selling of some $8M of shares. The selling seems to be basically by two officers of the company, so this selling probably does not mean much.
The next thing to look at is the P/E ratio. I get a current one of 11.5. The 5 year average low is 12 and the 5 year average high is 16. It shows a good price if the current one is below the 5 year average low and 11.5 is a fairly low ratio in itself. For the sites that use the last 12 months earnings, the P/E is around 12.5. When I look at the Price/Book Value Ratio, I get a current one of 1.21 and this is about 82% of the long term average of 1.48. This also shows a relatively good price.
I get a current Graham Price of $67.05, so a current stock price of $52.69 is some 21% below. This says that the current stock price is good. Also, when I look at the past history of this stock, it seems that buying it below the Graham Price is when you get the best returns for this company. The last thing to look at is the dividend yield. The current yield is 1.6% and the 5 year average is 1.2%. This also shows a good current price.
When I look at the analysts recommendations, I find Buy, Hold and Underperform recommendations. I can find no analyst that is excited by this stock. Some feel it is undervalued and therefore rate it a Buy. Others are not pleased that the stock came in with lower earnings than expected and there seems to be a lot of Hold ratings because of this. There are also concerns about the Credit Card write-offs by this company. The other thing is that consumer stocks seem to be out of favor. The stocks mostly favored at this time seem to be resource and material stocks.
Certainly, no one will ever make a big score by investing in this stock. However, if you are a long term investor and want to diversify your portfolio into Consumer stocks, then this would be a good stock to buy. As you can see from my return on this stock, I have made good solid returns, but nothing flashy. It would appear that this stock is selling at a good current price. At the moment, I am happy with the amount of stock I have in this company, so I am not personally in the market for more.
They engaged in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is www.corp.canadiantire.ca. See my spreadsheet at www.spbrunner.com/stocks/ctc.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
The first thing I always check is the Insider Buying and Insider Selling on the stock. The good news is that in the past year there has been some $4M of Insider Buying. However, there also has been some Insider Selling of some $8M of shares. The selling seems to be basically by two officers of the company, so this selling probably does not mean much.
The next thing to look at is the P/E ratio. I get a current one of 11.5. The 5 year average low is 12 and the 5 year average high is 16. It shows a good price if the current one is below the 5 year average low and 11.5 is a fairly low ratio in itself. For the sites that use the last 12 months earnings, the P/E is around 12.5. When I look at the Price/Book Value Ratio, I get a current one of 1.21 and this is about 82% of the long term average of 1.48. This also shows a relatively good price.
I get a current Graham Price of $67.05, so a current stock price of $52.69 is some 21% below. This says that the current stock price is good. Also, when I look at the past history of this stock, it seems that buying it below the Graham Price is when you get the best returns for this company. The last thing to look at is the dividend yield. The current yield is 1.6% and the 5 year average is 1.2%. This also shows a good current price.
When I look at the analysts recommendations, I find Buy, Hold and Underperform recommendations. I can find no analyst that is excited by this stock. Some feel it is undervalued and therefore rate it a Buy. Others are not pleased that the stock came in with lower earnings than expected and there seems to be a lot of Hold ratings because of this. There are also concerns about the Credit Card write-offs by this company. The other thing is that consumer stocks seem to be out of favor. The stocks mostly favored at this time seem to be resource and material stocks.
Certainly, no one will ever make a big score by investing in this stock. However, if you are a long term investor and want to diversify your portfolio into Consumer stocks, then this would be a good stock to buy. As you can see from my return on this stock, I have made good solid returns, but nothing flashy. It would appear that this stock is selling at a good current price. At the moment, I am happy with the amount of stock I have in this company, so I am not personally in the market for more.
They engaged in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is www.corp.canadiantire.ca. See my spreadsheet at www.spbrunner.com/stocks/ctc.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Thursday, February 18, 2010
Canadian Tire Corp
I am today reviewing Canadian Tire Corp (TSX-CTC.A); because I own it and the unaudited statements for the financial year, ending January 2, 2010 has been published. I first bought this stock in February 2000. On this stock, I have made a return of 10.8% per year. I bought some more shares in June 2009 and on my total investment, I have made a return of 10.7% per year.
If you look at my spreadsheet, you will see that an investment made 10 years ago, that is in 1999, would have made just 6.6% and one made 5 years ago in 2005 would have gain just 1.7%. When I bought this stock in both 2000 and 2006, I did not get it at the absolute lowest price, but I did get the stock at a reasonable price. In 1999 and in 2005, the stock had hit peaks or had a very good run up in price. What is important is to not buy stocks at their peaks. (Although, I must admit, this might be easier said than done.)
This is a retail stock. The dividends are not great coming in at an average yield of 1.2%. However, this stock has a decent record of dividend increases. Over the past 5 years, the dividend has increased at a rate of 11% per year. The 10 year growth in dividend is lower at 7.7%. Both are good figures. I did my original investment some 9 years ago and on my original money, I am making a 3.8% return in dividends.
For this stock, since it did not do very well last year, the growth figures are by and large not very good. Retail stocks tend to get hit hard by recessions. The best growth rates are, after dividend growth, the growth in Book Value. The 5 and 10 year growth figures are 7.7% per year and 10.2% per year. The Growth in revenue, earnings and cash flow were not good.
The last thing I want to talk about today is the Liquidity and Asset/Liability Ratios. Both these ratios are very good. The current Liquidity Ratio is 1.99 and the A/L Ratio is 1.72. These ratios have 5 year averages of 1.73 and 1.85. Let’s face it, the main reason people lose money on a long term investment is if the company goes bankrupt. This company has a solid balance sheet. However, I should mention that they do have their own credit card business, and this can cause problems for a company, especially in recessions.
I am happy with stock and I plan to continue to hold my Canadian Tire shares. Tomorrow, I will talk about whether or not this is a good time to buy shares in this company and what stock analysts say about it.
They engaged in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. Its web site is www.corp.canadiantire.ca. See my spreadsheet at www.spbrunner.com/stocks/ctc.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
If you look at my spreadsheet, you will see that an investment made 10 years ago, that is in 1999, would have made just 6.6% and one made 5 years ago in 2005 would have gain just 1.7%. When I bought this stock in both 2000 and 2006, I did not get it at the absolute lowest price, but I did get the stock at a reasonable price. In 1999 and in 2005, the stock had hit peaks or had a very good run up in price. What is important is to not buy stocks at their peaks. (Although, I must admit, this might be easier said than done.)
This is a retail stock. The dividends are not great coming in at an average yield of 1.2%. However, this stock has a decent record of dividend increases. Over the past 5 years, the dividend has increased at a rate of 11% per year. The 10 year growth in dividend is lower at 7.7%. Both are good figures. I did my original investment some 9 years ago and on my original money, I am making a 3.8% return in dividends.
For this stock, since it did not do very well last year, the growth figures are by and large not very good. Retail stocks tend to get hit hard by recessions. The best growth rates are, after dividend growth, the growth in Book Value. The 5 and 10 year growth figures are 7.7% per year and 10.2% per year. The Growth in revenue, earnings and cash flow were not good.
The last thing I want to talk about today is the Liquidity and Asset/Liability Ratios. Both these ratios are very good. The current Liquidity Ratio is 1.99 and the A/L Ratio is 1.72. These ratios have 5 year averages of 1.73 and 1.85. Let’s face it, the main reason people lose money on a long term investment is if the company goes bankrupt. This company has a solid balance sheet. However, I should mention that they do have their own credit card business, and this can cause problems for a company, especially in recessions.
I am happy with stock and I plan to continue to hold my Canadian Tire shares. Tomorrow, I will talk about whether or not this is a good time to buy shares in this company and what stock analysts say about it.
They engaged in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. Its web site is www.corp.canadiantire.ca. See my spreadsheet at www.spbrunner.com/stocks/ctc.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Wednesday, February 17, 2010
RioCan Real Estate 2
I am today reviewing RioCan REIT (TSX-REI.UN), because I own it, the annual statement (unaudited) for 2009 has just been published and the stock has had a big drop in price. The interesting thing about the drop in price on this stock is that I cannot find any analysts that are recommending a sell. I see analysts’ recommendations from Strong Buy to Buy to Hold. The consensus recommendation is a Hold. (See my site for information on analyst ratings.)
The first thing I like to look at is the Insider Buying and the Insider Selling action. There is insider selling to the tune of around $3M, but it seems to be all by one officer of the company. As I have mentioned before, people can sell for lots of reasons. We are in a recession, and maybe this officer of the company needs money. It would be more of a concern if there were lots of people selling, but this is not the case. The other thing is that there is almost no insider buying.
When I look at P/E ratio, I find that it is at 32. This is high. I get a 5 year average low of 23 and a 5 year average high of 34. Looking at these ratios, I think that absolute ratios do count. However, you do also want to look at ratios on a relative basis. This ratio is high no matter how you look at it. I know that people often give a P/FFO ratio (or on distributable income.) I get one at 12.8. This is not low either, but it is only slightly above the 5 year average low of 12.
The next thing I like to look is the Price/Book Value. Since the book value is going down rather than up, it is not surprising that the current price gives a P/BV that is some 15% above the long term average P/BV. This is not dramatically higher, but it is higher, which maybe gives this stock a reasonable type price, but not a good price. I also like to look at the Graham Price. Since the Graham Price is based on a formula that takes earnings and book value into account, it is not surprising that the Graham Price is way below the current price. I get a Graham Price of $9.83. This is over 80% below the current stock price.
The only ratio that says this stock might be at a good or reasonable price is the dividend yield. The current dividend yield is 7.7% and the 5 year average is 6.8%. So the dividend yield is high than average and this is a good sign. After having said all this, I am not selling my stock. I would go with the analysts that say it is a Hold. No one seems to expect this stock will do great over the next couple of years. Analysts seem to be thinking that the distributions will hold. It is also expected that the distributions will not grow until at least 2012.
As I have said, I will hold my stock. I do not think that price has been hammered enough to make it a really good buy. However, as I said at the beginning, some analysts disagree with this and think it is now an exceptional buy. I guess that only the future will tell who is right.
RioCan is an equity real estate trust, which owns a portfolio of retail properties across Canada and north Eastern USA. It owns and manages Canada's largest portfolio of shopping centers and owns approximately a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centers and drug store-anchored convenience centers located predominantly in the Northeastern United States. RioCan has also agreed to acquire an 80% interest in seven grocery anchored shopping centers in the United States. Its web site is www.riocan.com. See my spreadsheet at www.spbrunner.com/stocks/rei.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
The first thing I like to look at is the Insider Buying and the Insider Selling action. There is insider selling to the tune of around $3M, but it seems to be all by one officer of the company. As I have mentioned before, people can sell for lots of reasons. We are in a recession, and maybe this officer of the company needs money. It would be more of a concern if there were lots of people selling, but this is not the case. The other thing is that there is almost no insider buying.
When I look at P/E ratio, I find that it is at 32. This is high. I get a 5 year average low of 23 and a 5 year average high of 34. Looking at these ratios, I think that absolute ratios do count. However, you do also want to look at ratios on a relative basis. This ratio is high no matter how you look at it. I know that people often give a P/FFO ratio (or on distributable income.) I get one at 12.8. This is not low either, but it is only slightly above the 5 year average low of 12.
The next thing I like to look is the Price/Book Value. Since the book value is going down rather than up, it is not surprising that the current price gives a P/BV that is some 15% above the long term average P/BV. This is not dramatically higher, but it is higher, which maybe gives this stock a reasonable type price, but not a good price. I also like to look at the Graham Price. Since the Graham Price is based on a formula that takes earnings and book value into account, it is not surprising that the Graham Price is way below the current price. I get a Graham Price of $9.83. This is over 80% below the current stock price.
The only ratio that says this stock might be at a good or reasonable price is the dividend yield. The current dividend yield is 7.7% and the 5 year average is 6.8%. So the dividend yield is high than average and this is a good sign. After having said all this, I am not selling my stock. I would go with the analysts that say it is a Hold. No one seems to expect this stock will do great over the next couple of years. Analysts seem to be thinking that the distributions will hold. It is also expected that the distributions will not grow until at least 2012.
As I have said, I will hold my stock. I do not think that price has been hammered enough to make it a really good buy. However, as I said at the beginning, some analysts disagree with this and think it is now an exceptional buy. I guess that only the future will tell who is right.
RioCan is an equity real estate trust, which owns a portfolio of retail properties across Canada and north Eastern USA. It owns and manages Canada's largest portfolio of shopping centers and owns approximately a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centers and drug store-anchored convenience centers located predominantly in the Northeastern United States. RioCan has also agreed to acquire an 80% interest in seven grocery anchored shopping centers in the United States. Its web site is www.riocan.com. See my spreadsheet at www.spbrunner.com/stocks/rei.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Tuesday, February 16, 2010
RioCan Real Estate
I am today reviewing RioCan REIT (TSX-REI.UN), because I own it, the annual statement for 2009 has just been published and the stock has had a big drop in price. When this sort of thing happens, you have to ask yourself, is the drop in price a true reflection of what is going on in the company currently and will happen to the company in the future? If you are invested in this company, ask yourself, “Is this company is going bankrupt”? If not, then has it been so badly damaged that it will not recover or take many years to recover?
If you are a long term investor, short term problems in a company you have invested in should not be a problem. It should not be a problem even if they decrease their distributions or dividends. If you can make good future returns on your investment, then it is worthwhile keeping your shares. To sell shares in a company as it is tanking in the stock market can sometimes be the worse possible move to make.
First, let’s talk about what is good on this stock. The dividends have increased over the last 5 and 10 years at 2.4% per year and 2.8% per year. This is higher than the rate of inflation, as current inflation is very low. The bad thing about dividends is that they were last increased in 2008 and no one seems to feel that they will be increased anytime soon again.
A good thing is total return. The return as a stockholder is the combination of stock price increased and dividends received. The total return growth for the last 5 and 10 years is 9% per year and 19% per year. The thing to remark on is that all the 10 year returns on this stock is much better than for the last 5 years. This stock has had trouble since 2008. The other thing to remark on in connection with Total Return is that the Book Value of this stock has been declining and it has declined by less than 1% over the last 10 years, but by 2.4% over the last 5 years.
As with a lot of income trusts, REITs often have negative growth in book value. Personally, I feel you should take seriously the income that is considered to be capital gain. It probably is, especially if book value is going nowhere and in a lot of cases, it is going down. When you look at growth in Revenues, Distributable Income, Earnings and Cash Flow over the last 5 years they all are in negative territory. Over the last 10 years, these figures are better and most avoid negative values, but all are low. However, analysts seem to feel that all these figures will be better starting in 2010 and continuing into 2011 and beyond.
To end on a better note, the Asset/Liability Ratio is decent. The current ratio is 1.47. I like to see this ratio at 1.50 and the 5 year average is 1.53. Nevertheless, it has been just below 1.50 for the last 3 years. With this ratio at 1.47, it means that the Assets can cover the Liabilities.
I first bought this stock in 1998, with more in 2000 and 2006. I have made a return on stock of 15.8% per year. For the stock I bought in 1998, I have made a return of 13.6% per year. For the stock I bought in 2000, I have made a return of 18% per year. For the stock I bought in 2006, I have made on 3.4% return per year. Because of the recent drop in stock price, people who have not had the stock for a long period will not have made much, but people who had it for the long term will still have done fine. Since this stock is expected to start to recover this year, long term damage to the company does not appear to have happened.
RioCan is an equity real estate trust, which owns a portfolio of retail properties across Canada and north Eastern USA. It owns and manages Canada's largest portfolio of shopping centers and owns approximately a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centers and drug store-anchored convenience centers located predominantly in the Northeastern United States. RioCan has also agreed to acquire an 80% interest in seven grocery anchored shopping centers in the United States. Its web site is www.riocan.com. See my spreadsheet at www.spbrunner.com/stocks/rei.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
If you are a long term investor, short term problems in a company you have invested in should not be a problem. It should not be a problem even if they decrease their distributions or dividends. If you can make good future returns on your investment, then it is worthwhile keeping your shares. To sell shares in a company as it is tanking in the stock market can sometimes be the worse possible move to make.
First, let’s talk about what is good on this stock. The dividends have increased over the last 5 and 10 years at 2.4% per year and 2.8% per year. This is higher than the rate of inflation, as current inflation is very low. The bad thing about dividends is that they were last increased in 2008 and no one seems to feel that they will be increased anytime soon again.
A good thing is total return. The return as a stockholder is the combination of stock price increased and dividends received. The total return growth for the last 5 and 10 years is 9% per year and 19% per year. The thing to remark on is that all the 10 year returns on this stock is much better than for the last 5 years. This stock has had trouble since 2008. The other thing to remark on in connection with Total Return is that the Book Value of this stock has been declining and it has declined by less than 1% over the last 10 years, but by 2.4% over the last 5 years.
As with a lot of income trusts, REITs often have negative growth in book value. Personally, I feel you should take seriously the income that is considered to be capital gain. It probably is, especially if book value is going nowhere and in a lot of cases, it is going down. When you look at growth in Revenues, Distributable Income, Earnings and Cash Flow over the last 5 years they all are in negative territory. Over the last 10 years, these figures are better and most avoid negative values, but all are low. However, analysts seem to feel that all these figures will be better starting in 2010 and continuing into 2011 and beyond.
To end on a better note, the Asset/Liability Ratio is decent. The current ratio is 1.47. I like to see this ratio at 1.50 and the 5 year average is 1.53. Nevertheless, it has been just below 1.50 for the last 3 years. With this ratio at 1.47, it means that the Assets can cover the Liabilities.
I first bought this stock in 1998, with more in 2000 and 2006. I have made a return on stock of 15.8% per year. For the stock I bought in 1998, I have made a return of 13.6% per year. For the stock I bought in 2000, I have made a return of 18% per year. For the stock I bought in 2006, I have made on 3.4% return per year. Because of the recent drop in stock price, people who have not had the stock for a long period will not have made much, but people who had it for the long term will still have done fine. Since this stock is expected to start to recover this year, long term damage to the company does not appear to have happened.
RioCan is an equity real estate trust, which owns a portfolio of retail properties across Canada and north Eastern USA. It owns and manages Canada's largest portfolio of shopping centers and owns approximately a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centers and drug store-anchored convenience centers located predominantly in the Northeastern United States. RioCan has also agreed to acquire an 80% interest in seven grocery anchored shopping centers in the United States. Its web site is www.riocan.com. See my spreadsheet at www.spbrunner.com/stocks/rei.htm .
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.
Subscribe to:
Posts (Atom)