I own this stock (TSX-RUS). I originally got into this stock because it was on a list of dividend paying growth stocks. I followed an early Canadian financial blogger of Mike Higgs and this was one of the stocks he followed. Mike was always pushing dividend paying growth stocks as the ones we should buy. He influenced my thinking on stocks.
I first bought this stock in 2007. I bought more in 2009 and 2011. To date I have a total return of 5.4% per year. Of that return, 4.3% is attributable to dividends. So my dividend payments are 80% of my return. I expected to do better in the future.
This stock has an interesting dividend record. I have records back to 1990. They had a decreasing dividend from 1990 to 1992 and no dividends from 1993 to 1999. We had a recession in the early 1990 and the company had problems with earnings from 1991 to 1996. The company had increasing dividends from 1999 to 2008. For this stock, the highest dividends were paid in 2008. In 2009 dividends were decreased some 44%. Since 2011 they have again been increasing dividends.
Over the last 5 years dividends have decreased by 6.4% per year. Over the past 10 years, dividends have increased by 19%. This is because dividend increases before 2007 were very good. The increase for 2011 is very good. There were two increases totally a 15% dividend increase. The 5 year median dividend yield is 6.1%, but current yield is a lot lower at 4.4%. One analyst expects a 10% increase in dividends. This increase would move dividend yield to 4.8%.
The 5 year median Dividend Payout Ratios are 60% for EPS and 74% for CF. The 10 year median DPRs are lower at 47% for EPS and 45% for CF. The same figures for 2012 are currently expected to be 62% and 51%. The DPR for 2012 would be higher if dividends are increased in 2012.
Total return over the past 5 and 10 years has been 2% and 32% per year, respectively. The portion of the total return attributable to dividends is 5.4% and 12% per year, respectively. The return for the last 5 years is, of course, all dividends. There was a capital loss of 3.4% per year. For the last 10 years 37.4% of the return has been in dividends.
Mostly, the 10 year growth figures are better than the 5 year growth figures. The growth in revenue per shares is 0% and 2% per year over the past 5 and 10 years. However, growth in the last two years is much better at 10% and 24%. Earnings over the past 5 years are down 12% per year. However, earnings over the past 10 years are up 27% per year. However, analysts expect growth in revenues to be just under 5% for 2012.
Cash Flow per share over the past 5 years has decreased by 3% per year. However, over the past 10 years, cash flow per share is up 9.4% per year. Cash flow was up 49% in 2011, but analysts seem to expect a slight decline for 2012.
Book Value per share over the past 5 years has decrease by 1.7%. Book Value per share has increased by 7.4% per year over the past 10 years. Book Value was up 33% in 2010, but was down by 4.5% in 2011.
Debt Ratios have generally been very good on this stock. The current Liquidity Ratio at 3.41 is great. The 5 year median is also very good at 3.72. The current Debt Ratio at 2.14 is great as is the 5 year median ratio of 2.25. The current Leverage and Debt/Equity Ratios are also very good at 1.95 and 0.51.
The return on equity for the year ending December 2011 was 15%. The 5 year median ROE is 12.9%. The ROE based on comprehensive income was 12.2% at the end of 2011 and was 10.5% as the median value over the past 5 years. The ROE based on comprehensive income is low than the ROE, but it is still good.
This is a rather risky stock as far as dividend payers go. If you have it you have to be prepared for dividend adjustments depending on well the company is doing in the current business cycle. They decrease as well as increase dividends. The company does act prudently as far as dividend payments go. They have very good debt ratios. You would buy this stock for capital gain as well as dividends.
This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors under various names including Russel Metals, A. J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis. Its web site is here Russel Metals. See my spreadsheet at rus.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 for stocks followed and investment notes. Follow me on twitter.
Wednesday, March 14, 2012
Tuesday, March 13, 2012
ChemTrade Logistics Income Fund
I do not own this stock (TSX-CHE.UN). I decided to investigate this sock after reading an article in the G&M about investing in small cap stocks that pay dividends. This was one of the stocks mentioned that I had never heard of before. Site I found this at is G&M article. This stock is also mentioned in Today’s small-cap stocks to watch in the Globe and Mail dated February 24, 2012.
This stock was an Income Trust stock. I have waited to do my review until after the December 2011 year-end report was published. The best thing to say about this stock is the total return has been very good. Total return for the last 5 and 10 year is 25.2% and 15.6% per year, respectively.
The portion of this total return attributable to dividends is 12.1% and 13.2% per year, respectively. So the portion of your total return attributed to dividends would be 48% and 85% per year, respectively. The high percentage of dividend return points to great dividends in the past and that the majority of money earned over the past 10 years came from dividends.
Dividend growth is not so straight forward. Dividend growth over the past 5 year is a negative 3.5% per year. Dividend growth over the past 10 years is quite good at 9.2% per year. This is a small company and as such the management has to be prudent in dividend payments. With small companies it is not uncommon for dividends to be decreased. For this company, dividends were decreased in 2007 and since then they have been flat.
The revenue growth per share over the past 5 and 10 years has been 5.1% and 11.2% per year. The 5 year growth in EPS is quite high because they had a year of bad earnings 5 years ago. The 4 year growth in earnings is probably more reliable at 24% per year. The 10 year growth in EPS is just 4%.
Growth in Cash Flow has not been great with the 5 and 10 years growth at 5.7% and 0% per year, respectively. Book Value growth is 2.2% per year over the past 5 years but there is no growth over the past 10 years. It is quite typical for Income Trust stocks not to grow their book value.
The debt ratios are a bit disappointing. The current Liquidity Ratio is 1.24. The 5 and 10 year median ratios are not much better. The current Debt Ratio is 1.47. For this ratio, the 5 and 10 year median ratios are much better at 1.68 and 1.74. I would be happier with this stock if the current ratios were at least 1.50. The current Leverage and current Debt/Equity Ratio are ok at 3.14 and 2.14, but are higher than what I would like to see.
The Return on Equity Ratio started to get to a decent value in 2007. The one for 2011 is quite good at 17.6% and the 5 year median ROE is also quite good at 18.6%. The ROE based on comprehensive income was good for 2011 at 19%, with a 5 year ROE lower, but still good at 14.2%.
When I look at insider trading, I find that there is some insider buying and no insider selling. The insider buying is across the board with CEO, CFO, officers and directors all buying, but the amount is not that high at $0.5M. A lot of the insider buying seems to be by a company plan. The company does give out options, but they seem to give them out sparingly. A lot of insiders seem to have trust units. The CEO has trust units worth $2.7M. There are 36 institutions holding 36% of the units of this company. There has been some, but not much buying and selling over the past 3 months with institutions increasing their holdings by 2.4%.
I get 5 year median low and high Price/Earnings Ratios of 7.40 and 12.98. The current one of 9.33 is between the median P/E Ratio of 11.72 and the low one of 7.40 and therefore points to a good current stock price. I get a Graham price of $18.29 and the current stock price of $16.88 is some 7.7% lower. The low and median difference between the Graham Price and Stock price is the Stock price being at 17.7% and 1.6% lower than the Graham price. By this measure the stock price is good.
I get a 10 year median Price/Book Value Ratio of 1.55 and the current one at 2.05 is some 32% higher. Part of the problem with this test is the low growth in Book Value. On an absolute basis 2.05 is not a particular high ratio, but it is not low either, but more to a reasonable level.
The last test I usually do is the Dividend Yield test. The current yield of 7.11 is some 31% lower than the 5 year median dividend yield of 10.26%. The 5 year median dividend yield is very high as is the current 7.1% yield. The stock price tests are rather mixed, but overall the price is probably closer to a reasonable one.
When I look at analysts’ recommendations I find Strong Buy, Buy and Hold. The consensus recommendation is a Buy. There is a buy recommendation with a 12 month stock price of $18.25. This would give you an 8.15% capital gain and 7.11% dividend for a total return of 15.23%. I see another buy recommendation with a 12 month stock price of $19.50 and therefore a 21.6% total gain.
This is an industrial stock and therefore it is very sensitive to the business cycle. No one seems to feel that that the dividend is in jeopardy. A number of analysts feel that the company is recovering well from the recession. One analyst said it was not the time to buy as the stock is fairly priced.
There is certainly money to be made in this company over the long term. The dividend yield is very good, but this is an Industrial company and it is affected by the business cycle. We do know that they will reduce dividends when they have too, but it is unknown if they will rise them also. They recently said that they intend to use excess cash to pay down debt and to grow. Debt ratios for this company are not great and it is probably prudent of them to want to pay debt down.
Income Trust companies tended to use cash for distributions rather than growth. However, corporations tend to use excess cash for growth as well as dividends. The company talks about supporting the current dividend, but not about increasing it.
ChemTrade Logistics Income Fund is a global supplier of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite and a processor of spent acid, particularly in the U.S. Gulf Coast region. Chemtrade is also a regional supplier of sulphur, sodium chlorate and phosphorus pentasulphide, and also produces zinc oxide at three North American locations. Its web site is here ChemTrade. See my spreadsheet at che.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 for stocks followed and investment notes. Follow me on twitter.
This stock was an Income Trust stock. I have waited to do my review until after the December 2011 year-end report was published. The best thing to say about this stock is the total return has been very good. Total return for the last 5 and 10 year is 25.2% and 15.6% per year, respectively.
The portion of this total return attributable to dividends is 12.1% and 13.2% per year, respectively. So the portion of your total return attributed to dividends would be 48% and 85% per year, respectively. The high percentage of dividend return points to great dividends in the past and that the majority of money earned over the past 10 years came from dividends.
Dividend growth is not so straight forward. Dividend growth over the past 5 year is a negative 3.5% per year. Dividend growth over the past 10 years is quite good at 9.2% per year. This is a small company and as such the management has to be prudent in dividend payments. With small companies it is not uncommon for dividends to be decreased. For this company, dividends were decreased in 2007 and since then they have been flat.
The revenue growth per share over the past 5 and 10 years has been 5.1% and 11.2% per year. The 5 year growth in EPS is quite high because they had a year of bad earnings 5 years ago. The 4 year growth in earnings is probably more reliable at 24% per year. The 10 year growth in EPS is just 4%.
Growth in Cash Flow has not been great with the 5 and 10 years growth at 5.7% and 0% per year, respectively. Book Value growth is 2.2% per year over the past 5 years but there is no growth over the past 10 years. It is quite typical for Income Trust stocks not to grow their book value.
The debt ratios are a bit disappointing. The current Liquidity Ratio is 1.24. The 5 and 10 year median ratios are not much better. The current Debt Ratio is 1.47. For this ratio, the 5 and 10 year median ratios are much better at 1.68 and 1.74. I would be happier with this stock if the current ratios were at least 1.50. The current Leverage and current Debt/Equity Ratio are ok at 3.14 and 2.14, but are higher than what I would like to see.
The Return on Equity Ratio started to get to a decent value in 2007. The one for 2011 is quite good at 17.6% and the 5 year median ROE is also quite good at 18.6%. The ROE based on comprehensive income was good for 2011 at 19%, with a 5 year ROE lower, but still good at 14.2%.
When I look at insider trading, I find that there is some insider buying and no insider selling. The insider buying is across the board with CEO, CFO, officers and directors all buying, but the amount is not that high at $0.5M. A lot of the insider buying seems to be by a company plan. The company does give out options, but they seem to give them out sparingly. A lot of insiders seem to have trust units. The CEO has trust units worth $2.7M. There are 36 institutions holding 36% of the units of this company. There has been some, but not much buying and selling over the past 3 months with institutions increasing their holdings by 2.4%.
I get 5 year median low and high Price/Earnings Ratios of 7.40 and 12.98. The current one of 9.33 is between the median P/E Ratio of 11.72 and the low one of 7.40 and therefore points to a good current stock price. I get a Graham price of $18.29 and the current stock price of $16.88 is some 7.7% lower. The low and median difference between the Graham Price and Stock price is the Stock price being at 17.7% and 1.6% lower than the Graham price. By this measure the stock price is good.
I get a 10 year median Price/Book Value Ratio of 1.55 and the current one at 2.05 is some 32% higher. Part of the problem with this test is the low growth in Book Value. On an absolute basis 2.05 is not a particular high ratio, but it is not low either, but more to a reasonable level.
The last test I usually do is the Dividend Yield test. The current yield of 7.11 is some 31% lower than the 5 year median dividend yield of 10.26%. The 5 year median dividend yield is very high as is the current 7.1% yield. The stock price tests are rather mixed, but overall the price is probably closer to a reasonable one.
When I look at analysts’ recommendations I find Strong Buy, Buy and Hold. The consensus recommendation is a Buy. There is a buy recommendation with a 12 month stock price of $18.25. This would give you an 8.15% capital gain and 7.11% dividend for a total return of 15.23%. I see another buy recommendation with a 12 month stock price of $19.50 and therefore a 21.6% total gain.
This is an industrial stock and therefore it is very sensitive to the business cycle. No one seems to feel that that the dividend is in jeopardy. A number of analysts feel that the company is recovering well from the recession. One analyst said it was not the time to buy as the stock is fairly priced.
There is certainly money to be made in this company over the long term. The dividend yield is very good, but this is an Industrial company and it is affected by the business cycle. We do know that they will reduce dividends when they have too, but it is unknown if they will rise them also. They recently said that they intend to use excess cash to pay down debt and to grow. Debt ratios for this company are not great and it is probably prudent of them to want to pay debt down.
Income Trust companies tended to use cash for distributions rather than growth. However, corporations tend to use excess cash for growth as well as dividends. The company talks about supporting the current dividend, but not about increasing it.
ChemTrade Logistics Income Fund is a global supplier of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite and a processor of spent acid, particularly in the U.S. Gulf Coast region. Chemtrade is also a regional supplier of sulphur, sodium chlorate and phosphorus pentasulphide, and also produces zinc oxide at three North American locations. Its web site is here ChemTrade. See my spreadsheet at che.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 for stocks followed and investment notes. Follow me on twitter.
Monday, March 12, 2012
Calloway Real Estate Investment Trust 2
Calloway Real Estate Investment Trust (TSX-CWT.UN) has a current decent dividend of 5.6%, but the last time they raised the dividend was 2008. The 5 year median Distribution Payout Ratios for Cash Flow is 102% and the one for the end of 2011 is 104%. This is high. The 5 year median DPR based on Fund from Operations and Adjusted Fund from Operations are better at 90% and 94%, respectively.
When I look at insider trading, I find a bit of insider selling and a bit of insider buying, with net insider buying of $0.1M. Insiders may not have options, but they do have something similar called Deferred Units. As far as I can see, CFO and officers have more deferred units than trust units. Also, Mitchell Goldhar has a variety of Trust Units and Limited Partnership Units and the annual statement says he has approximately 21.5% of the units.
Some 94 institutions own some 42% of the outstanding units. Over the past 3 months they have bought and sold units and they have increased their units by 1.4% over this period.
I get 5 year median low and high Price/Adjusted Funds from Operations Ratios of 12.51 and 16.38. The current P/AFFO Ratio of 17.14 on a stock price of $27.43 would imply the current price is high. The 5 year median low and high Price/Funds from Operations Ratio are 12.57 and 16.04. The current P/FFO Ratio of $16.11 would also point to a high stock price.
I am not looking at the Price/Earnings Ratios as the expected EPS are not unduly high compared to the EPS of 2011, but are very high compared to past years. I do not think that using the P/E Ratios will give us a true picture of whether or not the current price is relative high or low. Since the Book Values have generally substantially increased because of new account rules I will not be using the Price/Book Value ratios either. I will also not use the Graham Price as this uses both EPS and Book Value per shares in its formula.
One thing I can use is the Price/Cash Flow Ratios. I get 5 year median low and high Price/Cash Flow Ratios of 13.44 and 18.13. The current Price/CF Ratio of 23.25 would suggest a rather high current stock price. I get a 5 year median Dividend Yield of 6.96% and the current one of 5.64% would also suggest a rather high current stock price. The current dividend yield is also lower than the 10 year median low dividend yield of 5.9%.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Buy. Analysts seem to mention the fact that they have a big client in Wal-Mart. A couple of analysts says it would be a nice core holding. No one says anything bad about this company, however, one analyst said not to buy at this time because of the high valuation (that is the stock price is too high).
CIBC has given this stock a buy (outperform) rating recently. For information on this, see I stock analysts. They have a target price to $30. Elsewhere CIBC has said they expect Calloway to raise their distributions this year.
The Globe and Mail had a recent article on why REITs are worth the money. It also says that prices are up because retail investors will pay for the good yields from REITs. You might also want to look at CIBC’s Canadian REITs monthly for January 2012 where they compare Canadian REITs. There is also some interesting information on this REIT at Canadian Dividend Stock site.
Cash money 101 has a recent blog entry that talks about REITs that have dividend reinvestment plans and optional cash payments. He does not include Calloway, but does talk about others I have mentioned like CDN REIT, RioCan and H& R. See Cash Money 101.
I think that larger portfolios should have some diversification into REITs. I have a 6.5% exposure to Real Estate, as you can get exposure to this section through other companies than just REITs. Personally, I would not have more than 10% exposure to this sector. You can make some good dividends, but increases are generally in line with inflation.
Personally, I would wonder if now is a good time to purchase REITs as they seem to have relatively high stock prices. I have found that paying too much for a stock affects your long term return on such stocks.
Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway. See my spreadsheet at cwt.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 for stocks followed and investment notes. Follow me on twitter.
When I look at insider trading, I find a bit of insider selling and a bit of insider buying, with net insider buying of $0.1M. Insiders may not have options, but they do have something similar called Deferred Units. As far as I can see, CFO and officers have more deferred units than trust units. Also, Mitchell Goldhar has a variety of Trust Units and Limited Partnership Units and the annual statement says he has approximately 21.5% of the units.
Some 94 institutions own some 42% of the outstanding units. Over the past 3 months they have bought and sold units and they have increased their units by 1.4% over this period.
I get 5 year median low and high Price/Adjusted Funds from Operations Ratios of 12.51 and 16.38. The current P/AFFO Ratio of 17.14 on a stock price of $27.43 would imply the current price is high. The 5 year median low and high Price/Funds from Operations Ratio are 12.57 and 16.04. The current P/FFO Ratio of $16.11 would also point to a high stock price.
I am not looking at the Price/Earnings Ratios as the expected EPS are not unduly high compared to the EPS of 2011, but are very high compared to past years. I do not think that using the P/E Ratios will give us a true picture of whether or not the current price is relative high or low. Since the Book Values have generally substantially increased because of new account rules I will not be using the Price/Book Value ratios either. I will also not use the Graham Price as this uses both EPS and Book Value per shares in its formula.
One thing I can use is the Price/Cash Flow Ratios. I get 5 year median low and high Price/Cash Flow Ratios of 13.44 and 18.13. The current Price/CF Ratio of 23.25 would suggest a rather high current stock price. I get a 5 year median Dividend Yield of 6.96% and the current one of 5.64% would also suggest a rather high current stock price. The current dividend yield is also lower than the 10 year median low dividend yield of 5.9%.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Buy. Analysts seem to mention the fact that they have a big client in Wal-Mart. A couple of analysts says it would be a nice core holding. No one says anything bad about this company, however, one analyst said not to buy at this time because of the high valuation (that is the stock price is too high).
CIBC has given this stock a buy (outperform) rating recently. For information on this, see I stock analysts. They have a target price to $30. Elsewhere CIBC has said they expect Calloway to raise their distributions this year.
The Globe and Mail had a recent article on why REITs are worth the money. It also says that prices are up because retail investors will pay for the good yields from REITs. You might also want to look at CIBC’s Canadian REITs monthly for January 2012 where they compare Canadian REITs. There is also some interesting information on this REIT at Canadian Dividend Stock site.
Cash money 101 has a recent blog entry that talks about REITs that have dividend reinvestment plans and optional cash payments. He does not include Calloway, but does talk about others I have mentioned like CDN REIT, RioCan and H& R. See Cash Money 101.
I think that larger portfolios should have some diversification into REITs. I have a 6.5% exposure to Real Estate, as you can get exposure to this section through other companies than just REITs. Personally, I would not have more than 10% exposure to this sector. You can make some good dividends, but increases are generally in line with inflation.
Personally, I would wonder if now is a good time to purchase REITs as they seem to have relatively high stock prices. I have found that paying too much for a stock affects your long term return on such stocks.
Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway. See my spreadsheet at cwt.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 for stocks followed and investment notes. Follow me on twitter.
Friday, March 9, 2012
Calloway Real Estate Investment Trust
I know several people in their 80’s. When you get to a certain age, you worry about getting old. Some in their 80’s that I know have bright minds and have energy. Some I know have dull minds and lack energy. I am talking about both men and women.
The ones that are bright, socialize, have something to do and they keep moving. They do some activity often swimming. One person I know is still working. The ones that are not like than seem to socialize less and less, seem to do nothing much and do not move much.
I am lucky because I have a circle of friends and we keep quite active. My personal favorites are dinner parties and going out for lunch, but I also go to parties and go out for dinners, go to Art shows, have a meetup group and to a local pub for a drink. I am working on this blog presently, but have some other projects also, like looking after my family tree and scanning old pictures to really go picture digital. I exercise and jog during the week. I read a lot and go for a lot of walks. I leave my home every day, even if it is just to go to my local Starbucks for a coffee. Being active is for me is probably easy as I live downtown.
Is anyone else thinking about this?
Now, on to what I want to talk about today. I follow two REITs that I do not own. I follow this one of Calloway Real Estate Investment Trust (TSX-CWT.UN) and H & R Real Estate Trust (TSX-HR.UN). However, H & R has not published the financial statements for 2011, so I see no point in doing another review of this stock at this point. My last review was in December 2011. For this review click >here and here for parts 1 and 2.
Calloway Real Estate Investment Trust (TSX-CWT.UN) has a current decent dividend of 5.6%, but the last time they raised the dividend was 2008. The 5 year median Distribution Payout Ratios for Cash Flow is 102% and the one for the end of 2011 is 104%. This is high. The 5 year median DPR based on Fund from Operations and Adjusted Fund from Operations are better at 90% and 94%, respectively.
I know a lot of analysts look at FFO and AFFO figures, but I think that the DPR re Cash Flow is the most important. I do not see any increase in Distributions occurring until the DPR re Cash Flow is better. I see no analyst that feels this will happen over the next couple of years.
The growth in distributions over the past 5 and 10 years was 1% and 3.8% respectively. With inflation running around 2%, this growth in distributions is not keeping up. Personally, I would expect that REITs distributions should increase around the rate of inflation.
For this REIT also there has been a huge increase in units outstanding. Over the past 5 and 10 years, units have increased at the rate of 6.5% and 75% per year, respectively. Yes, I did mean 75% per year over the past 10 years. It is very important to look at growth per unit rather than growth if you are a unitholder.
Growth in revenue per share is mediocre at just over 5% per year over the past 5 and 10 years. AFFO growth is not so hot at 1% and 3.5% per year over the past 5 and 10 years. For FFO, the 5 and 10 year growth is 0% and 15.5% per year, respectively. However, note that there has been a lot of changed to FFO or Distributable Income calculations over the past 10 years, so it is hard to say how good the 10 year growth figure is.
The EPS jumped this year by 1474%, and yes, I do mean over 1,000%. The 5 year growth is at 46% per year because of this. Analysts seem to think that EPS will continue to grow. Interestingly, the 10 year growth is just 3.4% because this company had better EPS in the past. Cash Flow has grown at 7% and 28.8%. However, Cash Flow was unusually low 10 years ago. If I look at 11 years of growth I get 8% per year, which is probably more realistic.
Book Value jumped in 2011 by 30%, which probably due to the new accounting rules. Even at that, the 5 year growth in Book Value is just 1% per year. The 10 year growth is a lot better at 20% per year.
The current Asset/Liability Ratio or Debt Ratio is 1.75 and therefore good. It is better than the 5 year median ratio of 1.55. The current Debt/Equity Ratio and Shareholders Equity Ratios are 2.75 and 1.58 and are ok. They are close to the 5 year median ratios.
The Return on Equity is ok at 9.6% for the end of 2011, but the 5 year median ROE at 2.7% is very low. There is no difference with the ROE based on comprehensive income.
This stock is mentioned in a market call article by Dennis Mitchell.
For this company, I do not see the distributions going up anytime soon as analysts do not expect much in the way of increasing cash flow in the near future. The company is paying out too much in distributions compared to the cash flow. They are in the 5th year of no increase in distributions. On Monday, I will take about what the analyst say about this stock and what my spreadsheet says about the current stock price.
Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway. See my spreadsheet at cwt.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 for stocks followed and investment notes. Follow me on twitter.
The ones that are bright, socialize, have something to do and they keep moving. They do some activity often swimming. One person I know is still working. The ones that are not like than seem to socialize less and less, seem to do nothing much and do not move much.
I am lucky because I have a circle of friends and we keep quite active. My personal favorites are dinner parties and going out for lunch, but I also go to parties and go out for dinners, go to Art shows, have a meetup group and to a local pub for a drink. I am working on this blog presently, but have some other projects also, like looking after my family tree and scanning old pictures to really go picture digital. I exercise and jog during the week. I read a lot and go for a lot of walks. I leave my home every day, even if it is just to go to my local Starbucks for a coffee. Being active is for me is probably easy as I live downtown.
Is anyone else thinking about this?
Now, on to what I want to talk about today. I follow two REITs that I do not own. I follow this one of Calloway Real Estate Investment Trust (TSX-CWT.UN) and H & R Real Estate Trust (TSX-HR.UN). However, H & R has not published the financial statements for 2011, so I see no point in doing another review of this stock at this point. My last review was in December 2011. For this review click >here and here for parts 1 and 2.
Calloway Real Estate Investment Trust (TSX-CWT.UN) has a current decent dividend of 5.6%, but the last time they raised the dividend was 2008. The 5 year median Distribution Payout Ratios for Cash Flow is 102% and the one for the end of 2011 is 104%. This is high. The 5 year median DPR based on Fund from Operations and Adjusted Fund from Operations are better at 90% and 94%, respectively.
I know a lot of analysts look at FFO and AFFO figures, but I think that the DPR re Cash Flow is the most important. I do not see any increase in Distributions occurring until the DPR re Cash Flow is better. I see no analyst that feels this will happen over the next couple of years.
The growth in distributions over the past 5 and 10 years was 1% and 3.8% respectively. With inflation running around 2%, this growth in distributions is not keeping up. Personally, I would expect that REITs distributions should increase around the rate of inflation.
For this REIT also there has been a huge increase in units outstanding. Over the past 5 and 10 years, units have increased at the rate of 6.5% and 75% per year, respectively. Yes, I did mean 75% per year over the past 10 years. It is very important to look at growth per unit rather than growth if you are a unitholder.
Growth in revenue per share is mediocre at just over 5% per year over the past 5 and 10 years. AFFO growth is not so hot at 1% and 3.5% per year over the past 5 and 10 years. For FFO, the 5 and 10 year growth is 0% and 15.5% per year, respectively. However, note that there has been a lot of changed to FFO or Distributable Income calculations over the past 10 years, so it is hard to say how good the 10 year growth figure is.
The EPS jumped this year by 1474%, and yes, I do mean over 1,000%. The 5 year growth is at 46% per year because of this. Analysts seem to think that EPS will continue to grow. Interestingly, the 10 year growth is just 3.4% because this company had better EPS in the past. Cash Flow has grown at 7% and 28.8%. However, Cash Flow was unusually low 10 years ago. If I look at 11 years of growth I get 8% per year, which is probably more realistic.
Book Value jumped in 2011 by 30%, which probably due to the new accounting rules. Even at that, the 5 year growth in Book Value is just 1% per year. The 10 year growth is a lot better at 20% per year.
The current Asset/Liability Ratio or Debt Ratio is 1.75 and therefore good. It is better than the 5 year median ratio of 1.55. The current Debt/Equity Ratio and Shareholders Equity Ratios are 2.75 and 1.58 and are ok. They are close to the 5 year median ratios.
The Return on Equity is ok at 9.6% for the end of 2011, but the 5 year median ROE at 2.7% is very low. There is no difference with the ROE based on comprehensive income.
This stock is mentioned in a market call article by Dennis Mitchell.
For this company, I do not see the distributions going up anytime soon as analysts do not expect much in the way of increasing cash flow in the near future. The company is paying out too much in distributions compared to the cash flow. They are in the 5th year of no increase in distributions. On Monday, I will take about what the analyst say about this stock and what my spreadsheet says about the current stock price.
Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway. See my spreadsheet at cwt.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 for stocks followed and investment notes. Follow me on twitter.
Thursday, March 8, 2012
Canadian Real Estate Investment Trust 2
As I mentioned yesterday, I have been interviewed by Money Sense Magazine. In an email my interviewer said that they would not mention my blog because there was not enough space. When I was interviewed by Me and My Money in the Globe, they also did not mention my blog. However, they did mention blogs when they were written by men. Do people have something against female bloggers? Just asking.
Now, back to the stock I want to review. This stock is Canadian Real Estate Investment Trust (TSX-REF.UN). I bought this in September 2006 and since that time I have made a total return of 11.8% per year. The portion of my total return attributable to distributions is 4.7% or 40% of my return.
When I look at insider trading, I find no insider selling and $1M of insider buying. Contrast this with the orgy of insider selling of $53.6M for RioCan. RioCan has always had insider selling, but nothing like the amount over the past year. CDN REIT’s use of options is much more muted than a lot of companies. Also, a lot of insiders hold shares worth in the 100s of thousands of dollars. The CEO shares are worth just over $26M.
Some 91 institutions hold some 61% of the units of this company. Over the past 3 months institutions have bought and sold units and they have marginally increased their investment in this company by 2.6%.
The current P/E is around 44.05 as no one seems to think they will earn much over the next few years. Looking at Funds from Operations, the high and low 5 year median P/FFO ratios are 14.08 and 11.48. The current one is 15.7, which shows a relatively high stock price. Adjusted Funds from Operations show a similar pattern, with the high and low 5 year median P/AFFO ratios being 16.35 and 13.26 and the current one at 17.58.
There was a 98% increase in the Book Value under the new accounting rules, so I see no sense in looking at the Price/Book Value ratios. The Graham Price is affected by Book Value and EPS, so I do not care to use this test either. Looking at Price/Cash Flow, I get low and high 5 year median P/CF Ratios of 12.32 and 15.19. I get a current P/CF of 15.45. This shows a relatively high stock price.
As far as Dividend Yield goes, I get a current one of 3.76% and a 5 year median of 4.64%, which is some 19% higher. This suggests a rather high stock price also. By the way, the 10 year median high dividend yield is 4.52%, which is also above the current dividend yield.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Hold. There is nothing unusual here.
One analyst said that this company has a long track record of solid and stable performance and a conservative strategy. A third of their operating income comes from Alberta, so this company relies quite heavily on the energy sector of Alberta. Some see this in a positive light and some do not. A number of analysts mention good management and high quality assets. One thinks it is a long term hold. A number liked the 70% payout ratios.
One analyst with a Hold recommendation gave a 12 months stock price of $39 and another with a Buy recommendation gave a 12 month stock price of $40. They are not that far apart.
One blogger talks about the 12 Top Real Estate Stocks in Canada. He mentions CDN Real Estate. A globe and mail article talks about why Canadian REITS are expensive. The dividend ninja recently talked about why he loves REITS.
I have done better with RioCan, but CDN over last 5 and 10 years has really done better than RioCan. For CDN the 5 and 10 year total return is 6.5% and 18%. For RioCan the 5 and 10 year total return is 6.3% and 15.8%. Insiders’ of CDN seem more committed to the company by holding shares. They have not have the massive sell off the RioCan had last year. They do not have the options to do this in the first place.
Maybe I should have increased my shares in CDN rather than RioCan when I wanted to buy more REIT shares in 2010 and 2011. But, on the other hand, most analysts think that RioCan will do much better CDN on a go forward basis. Perhaps neither is a good buy at present because according to by spreadsheets they are both overpriced.
Canadian Real Estate Investment Trust is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. Its web site is here CDN Real Estate . See my spreadsheet at ref.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 for stocks followed and investment notes. Follow me on twitter.
Now, back to the stock I want to review. This stock is Canadian Real Estate Investment Trust (TSX-REF.UN). I bought this in September 2006 and since that time I have made a total return of 11.8% per year. The portion of my total return attributable to distributions is 4.7% or 40% of my return.
When I look at insider trading, I find no insider selling and $1M of insider buying. Contrast this with the orgy of insider selling of $53.6M for RioCan. RioCan has always had insider selling, but nothing like the amount over the past year. CDN REIT’s use of options is much more muted than a lot of companies. Also, a lot of insiders hold shares worth in the 100s of thousands of dollars. The CEO shares are worth just over $26M.
Some 91 institutions hold some 61% of the units of this company. Over the past 3 months institutions have bought and sold units and they have marginally increased their investment in this company by 2.6%.
The current P/E is around 44.05 as no one seems to think they will earn much over the next few years. Looking at Funds from Operations, the high and low 5 year median P/FFO ratios are 14.08 and 11.48. The current one is 15.7, which shows a relatively high stock price. Adjusted Funds from Operations show a similar pattern, with the high and low 5 year median P/AFFO ratios being 16.35 and 13.26 and the current one at 17.58.
There was a 98% increase in the Book Value under the new accounting rules, so I see no sense in looking at the Price/Book Value ratios. The Graham Price is affected by Book Value and EPS, so I do not care to use this test either. Looking at Price/Cash Flow, I get low and high 5 year median P/CF Ratios of 12.32 and 15.19. I get a current P/CF of 15.45. This shows a relatively high stock price.
As far as Dividend Yield goes, I get a current one of 3.76% and a 5 year median of 4.64%, which is some 19% higher. This suggests a rather high stock price also. By the way, the 10 year median high dividend yield is 4.52%, which is also above the current dividend yield.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus is a Hold. There is nothing unusual here.
One analyst said that this company has a long track record of solid and stable performance and a conservative strategy. A third of their operating income comes from Alberta, so this company relies quite heavily on the energy sector of Alberta. Some see this in a positive light and some do not. A number of analysts mention good management and high quality assets. One thinks it is a long term hold. A number liked the 70% payout ratios.
One analyst with a Hold recommendation gave a 12 months stock price of $39 and another with a Buy recommendation gave a 12 month stock price of $40. They are not that far apart.
One blogger talks about the 12 Top Real Estate Stocks in Canada. He mentions CDN Real Estate. A globe and mail article talks about why Canadian REITS are expensive. The dividend ninja recently talked about why he loves REITS.
I have done better with RioCan, but CDN over last 5 and 10 years has really done better than RioCan. For CDN the 5 and 10 year total return is 6.5% and 18%. For RioCan the 5 and 10 year total return is 6.3% and 15.8%. Insiders’ of CDN seem more committed to the company by holding shares. They have not have the massive sell off the RioCan had last year. They do not have the options to do this in the first place.
Maybe I should have increased my shares in CDN rather than RioCan when I wanted to buy more REIT shares in 2010 and 2011. But, on the other hand, most analysts think that RioCan will do much better CDN on a go forward basis. Perhaps neither is a good buy at present because according to by spreadsheets they are both overpriced.
Canadian Real Estate Investment Trust is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. Its web site is here CDN Real Estate . See my spreadsheet at ref.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 for stocks followed and investment notes. Follow me on twitter.
Wednesday, March 7, 2012
Canadian Real Estate Investment Trust
First I should probably tell you I have been interviewed by Money Sense magazine. I was at a photo shoot today in connection with the interview. It was interesting. They had me looking at apples, weighing two sets of apples and juggling (or the best I could do) apples.
Now, on to the stock I own this stock Canadian Real Estate Investment Trust (TSX-REF.UN) that I want to review today. I bought this in September 2006 and since that time I have made a total return of 11.8% per year. The portion of my total return attributable to distributions is 4.7% or 40% of my return.
The 5 year median dividend yield on this stock is 4.6%. The growth in dividends over the past 5 and 10 years is 2.1% and 2% per year, respectively. Inflation is running at 1.9% and 2.2% per year over the past 5 and 10 years. So, dividend increases have sort of kept up with inflation. After being invested in this stock for 6 years, my yield on my original investment is 5.5%.
The Distribution Payout Ratios for this company are 68% for cash flow, 60% for Funds from Operations (FFO) and 69% for Adjusted Funds from Operations (AFFO). The company has a fairly good record of increasing dividends since 2002.
The growth rates for this company are ok, but nothing to write home about. The growth in Revenue per shares is just 1% and 5% per year, over the past 5 and 10 years, respectively. Growth in FFO is 4% and 69.6% per year over the past 5 and 10 years, respectively.
There is no growth in EPS. The best is growth in Cash Flow which is 4.4% and 8.5% per year, over the past 5 and 10 years. Book Value jumped in 2011 because of the new accounting rules, so it is hard to judge were this is going. They also have been increasing the units outstanding by 3% and 4.7% per year over the past 5 and 10 years.
As for debt ratios, the Liquidity Ratio has jumped all over the place, which is rather typical for this type of company. It is 1.10 for 2011 and this is fine. The Asset/Liability Ratio is 2.06 at the end of 2011. This is a very good ratio and it is higher than the 5 year median ratio of 1.55.
The current Leverage and Debt/Equity Ratios are good at 1.95 and 0.95 at the end of 2011. They are also better than the corresponding 5 year median ratios of 2.60 and 1.60.
The Return on Equity for 2011 was very low at 2.7%. This is due both to increase in Book Value (98%) and decrease in earnings (72%). The 5 year median ROE is much better at 12.9%. The ROE based on comprehensive income is similar to the above ROE. It is 2.1% for the end of 2011. The 5 year ROE based on comprehensive income is a bit lower over the past 5 years at 9.8%.
This stock has performed much as I would have expected and I plan to continue to keep it. I have made more out of my investment in RioCan than CDN Real Estate, but this stock has lower DPRs and will probably continue to increase its distribution on a modest basis.
Canadian Real Estate Investment Trust is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. Its web site is here CDN Real Estate. See my spreadsheet at ref.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 for stocks followed and investment notes. Follow me on twitter.
Now, on to the stock I own this stock Canadian Real Estate Investment Trust (TSX-REF.UN) that I want to review today. I bought this in September 2006 and since that time I have made a total return of 11.8% per year. The portion of my total return attributable to distributions is 4.7% or 40% of my return.
The 5 year median dividend yield on this stock is 4.6%. The growth in dividends over the past 5 and 10 years is 2.1% and 2% per year, respectively. Inflation is running at 1.9% and 2.2% per year over the past 5 and 10 years. So, dividend increases have sort of kept up with inflation. After being invested in this stock for 6 years, my yield on my original investment is 5.5%.
The Distribution Payout Ratios for this company are 68% for cash flow, 60% for Funds from Operations (FFO) and 69% for Adjusted Funds from Operations (AFFO). The company has a fairly good record of increasing dividends since 2002.
The growth rates for this company are ok, but nothing to write home about. The growth in Revenue per shares is just 1% and 5% per year, over the past 5 and 10 years, respectively. Growth in FFO is 4% and 69.6% per year over the past 5 and 10 years, respectively.
There is no growth in EPS. The best is growth in Cash Flow which is 4.4% and 8.5% per year, over the past 5 and 10 years. Book Value jumped in 2011 because of the new accounting rules, so it is hard to judge were this is going. They also have been increasing the units outstanding by 3% and 4.7% per year over the past 5 and 10 years.
As for debt ratios, the Liquidity Ratio has jumped all over the place, which is rather typical for this type of company. It is 1.10 for 2011 and this is fine. The Asset/Liability Ratio is 2.06 at the end of 2011. This is a very good ratio and it is higher than the 5 year median ratio of 1.55.
The current Leverage and Debt/Equity Ratios are good at 1.95 and 0.95 at the end of 2011. They are also better than the corresponding 5 year median ratios of 2.60 and 1.60.
The Return on Equity for 2011 was very low at 2.7%. This is due both to increase in Book Value (98%) and decrease in earnings (72%). The 5 year median ROE is much better at 12.9%. The ROE based on comprehensive income is similar to the above ROE. It is 2.1% for the end of 2011. The 5 year ROE based on comprehensive income is a bit lower over the past 5 years at 9.8%.
This stock has performed much as I would have expected and I plan to continue to keep it. I have made more out of my investment in RioCan than CDN Real Estate, but this stock has lower DPRs and will probably continue to increase its distribution on a modest basis.
Canadian Real Estate Investment Trust is an equity real estate trust, which acquires and owns a portfolio of income-producing properties. It specializes in the acquisition and ownership of community shopping centers, industrial and office properties across Canada. This company owns office, industrial, retail properties and some miscellaneous items such as apartment buildings. This stock is rated STA-3M by DBRS. Its web site is here CDN Real Estate. See my spreadsheet at ref.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 for stocks followed and investment notes. Follow me on twitter.
Tuesday, March 6, 2012
RioCan Real Estate 2
I own this stock (TSX-REI.UN). I bought some REITs for diversification. I first bought this stock in 1998, then some more in 2000, 2006, 2010 and 2011. I have made a return of 17% per year on this stock. Of this return, some 7.45% per year is attributable to distributions or 44% of my return.
When I look at insider trading, I find some $53.6M of insider selling and a net of $52.7M of net insider selling. As you can see there is some, but minimal (under a $1M) of insider buying. Insider selling is by CEO, CFO, officers and directors. The most is by officers at $32.7M. All the insiders except for directors have lots more options than shares. I do not see this as a great situation. I think that stock options never fulfilled their purpose of aligning insiders’ interest with shareholders’ interests.
There are some 184 institutions that hold some 40% of the units under this company. Institutions have bought and sold this units of this REIT over the past 3 months and have decreased their exposure to this company by 2% over this period.
I will look at Price/Earnings Ratios, but when analysts give out EPS they sometimes mean Funds from Operations (FFO) or Adjusted Funds from Operations (AFFO) and they do not say this. Also, according to RioCan’s financial statements, the EPS would have been $6.04 under IFRS rather than $1.22 in 2010 as reported under old accounting rules, and the EPS for 2011 was $3.25. No analyst gives an EPS value anywhere close to this for 2012 and the consensus is around $1.56.
My spreadsheet says that the low and high 5 year median P/E Ratios are 19.03 and 32.69. The current one at 17.06 would appear to be relatively low and showing a good stock price. Looking at FFO, I get high and low 5 year Price/FFO ratios of 12.23 and 16.34. The current P/FFO at 18.46 would indicate a rather relatively high stock price.
Since the Graham Price depends on EPS and Book Value per share and both these have been heavily affected by the new accounting rules, I see no point in comparing stock price to Graham Price. I also see no point in comparing median Price/Book Value Ratios to the current one because of the affect the new accounting rules had on the Book Value.
There are other things to look at, like Price/Cash Flow Ratios. I get low and high median P/CF Ratios of 13.12 and 18.22. The current one of 17.75 is just below the high level and would suggest a relatively high stock price.
The problem with looking at Dividend Yield is that they have not increased dividends since 2009. However, the current Dividend Yield of 5.02% is some 25% less than the 5 year median yield of 6.73%. Also, the 10 year median high yield is also higher at 5.92%. So my spreadsheet seems to be show a relatively high current stock price of $27.51.
When I look at analysts’ recommendations I find Strong Buy, Buy, and Hold recommendations. The consensus would be a Buy. This is not an unusual consensus recommendation. Most consensus recommendations are such. One Hold recommendation gives a 12 month price of $27.91. One Buy recommendation gives a 12 month stock price of $29. They are looking for a P/AFFO Ratio of 21 against the 2013 AFFO. (My spreadsheet gives a low and high 5 year median P/AFFO Ratios of 13.64 and 18.21.)
One analyst said he really liked RioCan REIT (TSX-REI.UN) for its management and diversification. One Buy recommendation acknowledged the problem of DPR over 100% but feels that the company is making progress and will fix this by year end. One analyst acknowledged the high valuation, but thought it was a good long term investment.
One G&M article deals with Housing your investments in REITs . Another one talks about how REITs will continue to outperform according in a G&M article.
The Dividend Guy has a fairly recent blog entry on REITs . Also see My Own Advisor’s blog entry on REITs .
I plan to continue to hold on to my shares in this company. I still do not feel totally comfortable about valuing REITs. At the moment I only have 6.4% of my portfolio in Real Estate companies and will keep it there for the time being.
RioCan is Canada's largest real estate investment trust. It owns and manages Canada's largest portfolio of shopping centers. RioCan owns an 80% interest in 31 grocery anchored and new format retail centers in the United States through various joint venture arrangements. In addition, RioCan owns 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. This stock is rated STA-2M by DBRS. Its web site is here RioCan. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.
When I look at insider trading, I find some $53.6M of insider selling and a net of $52.7M of net insider selling. As you can see there is some, but minimal (under a $1M) of insider buying. Insider selling is by CEO, CFO, officers and directors. The most is by officers at $32.7M. All the insiders except for directors have lots more options than shares. I do not see this as a great situation. I think that stock options never fulfilled their purpose of aligning insiders’ interest with shareholders’ interests.
There are some 184 institutions that hold some 40% of the units under this company. Institutions have bought and sold this units of this REIT over the past 3 months and have decreased their exposure to this company by 2% over this period.
I will look at Price/Earnings Ratios, but when analysts give out EPS they sometimes mean Funds from Operations (FFO) or Adjusted Funds from Operations (AFFO) and they do not say this. Also, according to RioCan’s financial statements, the EPS would have been $6.04 under IFRS rather than $1.22 in 2010 as reported under old accounting rules, and the EPS for 2011 was $3.25. No analyst gives an EPS value anywhere close to this for 2012 and the consensus is around $1.56.
My spreadsheet says that the low and high 5 year median P/E Ratios are 19.03 and 32.69. The current one at 17.06 would appear to be relatively low and showing a good stock price. Looking at FFO, I get high and low 5 year Price/FFO ratios of 12.23 and 16.34. The current P/FFO at 18.46 would indicate a rather relatively high stock price.
Since the Graham Price depends on EPS and Book Value per share and both these have been heavily affected by the new accounting rules, I see no point in comparing stock price to Graham Price. I also see no point in comparing median Price/Book Value Ratios to the current one because of the affect the new accounting rules had on the Book Value.
There are other things to look at, like Price/Cash Flow Ratios. I get low and high median P/CF Ratios of 13.12 and 18.22. The current one of 17.75 is just below the high level and would suggest a relatively high stock price.
The problem with looking at Dividend Yield is that they have not increased dividends since 2009. However, the current Dividend Yield of 5.02% is some 25% less than the 5 year median yield of 6.73%. Also, the 10 year median high yield is also higher at 5.92%. So my spreadsheet seems to be show a relatively high current stock price of $27.51.
When I look at analysts’ recommendations I find Strong Buy, Buy, and Hold recommendations. The consensus would be a Buy. This is not an unusual consensus recommendation. Most consensus recommendations are such. One Hold recommendation gives a 12 month price of $27.91. One Buy recommendation gives a 12 month stock price of $29. They are looking for a P/AFFO Ratio of 21 against the 2013 AFFO. (My spreadsheet gives a low and high 5 year median P/AFFO Ratios of 13.64 and 18.21.)
One analyst said he really liked RioCan REIT (TSX-REI.UN) for its management and diversification. One Buy recommendation acknowledged the problem of DPR over 100% but feels that the company is making progress and will fix this by year end. One analyst acknowledged the high valuation, but thought it was a good long term investment.
One G&M article deals with Housing your investments in REITs . Another one talks about how REITs will continue to outperform according in a G&M article.
The Dividend Guy has a fairly recent blog entry on REITs . Also see My Own Advisor’s blog entry on REITs .
I plan to continue to hold on to my shares in this company. I still do not feel totally comfortable about valuing REITs. At the moment I only have 6.4% of my portfolio in Real Estate companies and will keep it there for the time being.
RioCan is Canada's largest real estate investment trust. It owns and manages Canada's largest portfolio of shopping centers. RioCan owns an 80% interest in 31 grocery anchored and new format retail centers in the United States through various joint venture arrangements. In addition, RioCan owns 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. This stock is rated STA-2M by DBRS. Its web site is here RioCan. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.
Monday, March 5, 2012
RioCan Real Estate
I am starting on the review of my REIT investments. I must say that I have always had a problem with viewing REITs and Income Trusts. One thing I did not like was that distributions were based on Distributable Income (DI). It seems like no one ever agreed on how to calculate this.
Now distributions are based on Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). These also seem to have the same problem where no one seems to agree on how to calculate them. For example, TD Waterhouse’s report on this company gives 2011 actual FFO and AFFO as 1.28 and 1.22. The financials from RioCan gives FFO and AFFO as 1.43 and 1.29. I have used the ones provided by RioCan.
I was never worried about basing distributions on EPS. I have always felt this was a rather fake figure. Its value is in it makes it possible to compare different stocks rather than what it really tells you how well a particular company is doing.
What I still view as important is distributions based on cash flow, especially the cash flow that excludes changes in assets and Liabilities. For a discussion on cash flow, see investors friend site.
If you look at Dividend Payout Ratios based on Cash Flow, you can see why both Canadian Real Estate Investment Trust (TSX-REF) with 5 year median DPRs of 68% and H&R with a 5 year DPR of 87% are raising their distributions. Calloway Real Estate Investment Trust with a 5 year median DPR of 102% and RioCan Real Estate at 105% are not. (Yes, I know there are lot more things going on with H&R such as they cut their dividend in 2009 before they started to rise it again.)
A lot of income trusts and REITs could not grow their book values because of high distributions. Although I have noticed that book values generally have gone up quite a bit due to recent change in accounting rules to IFRS. It is hard to say what the long term effect of the IFRS accounting rules will be. Will book values hold up under these rules or will they again trend downward again?
Does anyone have thoughts about DPRs and Book Values of REITS?
The first stock I want to review is RioCan (TSX-REI.UN) a stock that I own. I bought some REITs for diversification. I first bought this stock in 1998, then some more in 2000, 2006, 2010 and 2011. I have made a return of 17% per year on this stock. Of this return, some 7.45% per year is attributable to distributions or 44% of my return.
However, I must admit that over the past 5 years, I have earned much less with my total return at 7.7%. Over the past 5 years the distributions portion of my return was 4.6% per year or almost 60% of my total return. I think that all REITs have not done as well in the last 5 years as in past years. They are still recovering from our latest recession.
This company had a fairly good record of increasing distributions before they were frozen in 2009. The 5 and 10 year growth in distributions are 1.2% and 2.4% per year. Inflation is running at 1.9% and 2.2% per year over the past 5 and 10 years. What you want in increases in distributions from REITs are ones that are higher than inflation. And, before 2009, this REIT did this. (I got my inflation figures from Bank of Canada.)
This company has not shown much growth. One problem is because they pay out so much in distributions, they have options left of selling units or debt to raise money. The units of this company have been increasing at almost 7% per year over the past 5 and 10 years.
I do not seem much growth per unit and this is what, as a shareholder I am interested in. Revenues per unit have only increased at the rate of 1% and 4% per year over the past 5 years and 10 years respectively. According to RioCan financial statements FFO has grown at the rate of 0% and 1% per year over the past 5 and 10 years. I do not have 10 year figures for AFFO as it has not been around that long. However, AFFO has not grown over the past 5 years.
It is hard to valuate growth in EPS as EPS increased by 166% in 2011. This increase seems to be because of new IFRS accounting rules. Cash flow declined by 3% per year over the past 5 years. It has increased by 1.2% per year over the past 10 years. Book Value increased by 120% because of new account rules, so it is also hard to valuate this increase.
On the other hand, a return of 7.7% per year over the past 5 years is not a bad return. Real Estate has been hit by the recent recession. The company may not be growing their earnings and cash flow much, but they have had not year of negative earnings or negative cash flow.
According to the financial statements, the Distribution Payout Ratios for 2011 in connection with AFFO was 107%, compared to a 5 year median of 106%. The DPR for 2011 for FFO was 96.5% compared to a 5 year median of 95.2%. The DPR in 2011for EPS was 42%, compared to a 5 year median of 159%. The DPR for cash flow was 108% compared to a 5 year median of 105%.
It is clear from all this that they are paying out too much in distributions. However, I can understand why they do not decrease the distributions. Companies that do this can often expect a harsh response from shareholders. Their overpayment concerning cash flow is low, so to decrease dividends by 5 or 10% would cause far more trouble than it is worth.
All the debt ratios are fine. The Liquidity Ratio is 1.23 is ok and is a bit lower than the 5 year median one of 1.29. The Asset/Liability Ratio is quite good at 2.02 and is better than the 5 year median one of 1.47. The Leverage Ratio of 2.11 is good and better than the 5 year median of 2.67. Also, the Debt/Equity Ratio of 1.04 is good and better than the 5 year median of 1.67.
I get a Return on Equity for 2011 was 17.3% and this has a much lower 5 year median value of 10.5%. The ROE based on comprehensive income is close in 2011 at 16.9%, however, the 5year median based on comprehensive income is much lower at 8.4%.
Tomorrow I will look at what analysts are saying about this company and what my spreadsheet says about the current stock. I only have 6.4% of my money in Real Estate companies. Beside this one and Canadian Real Estate Investment Trust (TSX-REF.UN), I have Melcor Developments (TSX-MDR).
I will keep this stock. I like to have some money in Real Estate. Also, considering the recession, this stock has not done badly at a 7.7% per year return over past 5 years. They may be paying a bit too much in Distributions, but their debt ratios are fine.
RioCan is Canada's largest real estate investment trust. It owns and manages Canada's largest portfolio of shopping centers. RioCan owns an 80% interest in 31 grocery anchored and new format retail centers in the United States through various joint venture arrangements. In addition, RioCan owns 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. This stock is rated STA-2M by DBRS. Its web site is here RioCan. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.
Now distributions are based on Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). These also seem to have the same problem where no one seems to agree on how to calculate them. For example, TD Waterhouse’s report on this company gives 2011 actual FFO and AFFO as 1.28 and 1.22. The financials from RioCan gives FFO and AFFO as 1.43 and 1.29. I have used the ones provided by RioCan.
I was never worried about basing distributions on EPS. I have always felt this was a rather fake figure. Its value is in it makes it possible to compare different stocks rather than what it really tells you how well a particular company is doing.
What I still view as important is distributions based on cash flow, especially the cash flow that excludes changes in assets and Liabilities. For a discussion on cash flow, see investors friend site.
If you look at Dividend Payout Ratios based on Cash Flow, you can see why both Canadian Real Estate Investment Trust (TSX-REF) with 5 year median DPRs of 68% and H&R with a 5 year DPR of 87% are raising their distributions. Calloway Real Estate Investment Trust with a 5 year median DPR of 102% and RioCan Real Estate at 105% are not. (Yes, I know there are lot more things going on with H&R such as they cut their dividend in 2009 before they started to rise it again.)
A lot of income trusts and REITs could not grow their book values because of high distributions. Although I have noticed that book values generally have gone up quite a bit due to recent change in accounting rules to IFRS. It is hard to say what the long term effect of the IFRS accounting rules will be. Will book values hold up under these rules or will they again trend downward again?
Does anyone have thoughts about DPRs and Book Values of REITS?
The first stock I want to review is RioCan (TSX-REI.UN) a stock that I own. I bought some REITs for diversification. I first bought this stock in 1998, then some more in 2000, 2006, 2010 and 2011. I have made a return of 17% per year on this stock. Of this return, some 7.45% per year is attributable to distributions or 44% of my return.
However, I must admit that over the past 5 years, I have earned much less with my total return at 7.7%. Over the past 5 years the distributions portion of my return was 4.6% per year or almost 60% of my total return. I think that all REITs have not done as well in the last 5 years as in past years. They are still recovering from our latest recession.
This company had a fairly good record of increasing distributions before they were frozen in 2009. The 5 and 10 year growth in distributions are 1.2% and 2.4% per year. Inflation is running at 1.9% and 2.2% per year over the past 5 and 10 years. What you want in increases in distributions from REITs are ones that are higher than inflation. And, before 2009, this REIT did this. (I got my inflation figures from Bank of Canada.)
This company has not shown much growth. One problem is because they pay out so much in distributions, they have options left of selling units or debt to raise money. The units of this company have been increasing at almost 7% per year over the past 5 and 10 years.
I do not seem much growth per unit and this is what, as a shareholder I am interested in. Revenues per unit have only increased at the rate of 1% and 4% per year over the past 5 years and 10 years respectively. According to RioCan financial statements FFO has grown at the rate of 0% and 1% per year over the past 5 and 10 years. I do not have 10 year figures for AFFO as it has not been around that long. However, AFFO has not grown over the past 5 years.
It is hard to valuate growth in EPS as EPS increased by 166% in 2011. This increase seems to be because of new IFRS accounting rules. Cash flow declined by 3% per year over the past 5 years. It has increased by 1.2% per year over the past 10 years. Book Value increased by 120% because of new account rules, so it is also hard to valuate this increase.
On the other hand, a return of 7.7% per year over the past 5 years is not a bad return. Real Estate has been hit by the recent recession. The company may not be growing their earnings and cash flow much, but they have had not year of negative earnings or negative cash flow.
According to the financial statements, the Distribution Payout Ratios for 2011 in connection with AFFO was 107%, compared to a 5 year median of 106%. The DPR for 2011 for FFO was 96.5% compared to a 5 year median of 95.2%. The DPR in 2011for EPS was 42%, compared to a 5 year median of 159%. The DPR for cash flow was 108% compared to a 5 year median of 105%.
It is clear from all this that they are paying out too much in distributions. However, I can understand why they do not decrease the distributions. Companies that do this can often expect a harsh response from shareholders. Their overpayment concerning cash flow is low, so to decrease dividends by 5 or 10% would cause far more trouble than it is worth.
All the debt ratios are fine. The Liquidity Ratio is 1.23 is ok and is a bit lower than the 5 year median one of 1.29. The Asset/Liability Ratio is quite good at 2.02 and is better than the 5 year median one of 1.47. The Leverage Ratio of 2.11 is good and better than the 5 year median of 2.67. Also, the Debt/Equity Ratio of 1.04 is good and better than the 5 year median of 1.67.
I get a Return on Equity for 2011 was 17.3% and this has a much lower 5 year median value of 10.5%. The ROE based on comprehensive income is close in 2011 at 16.9%, however, the 5year median based on comprehensive income is much lower at 8.4%.
Tomorrow I will look at what analysts are saying about this company and what my spreadsheet says about the current stock. I only have 6.4% of my money in Real Estate companies. Beside this one and Canadian Real Estate Investment Trust (TSX-REF.UN), I have Melcor Developments (TSX-MDR).
I will keep this stock. I like to have some money in Real Estate. Also, considering the recession, this stock has not done badly at a 7.7% per year return over past 5 years. They may be paying a bit too much in Distributions, but their debt ratios are fine.
RioCan is Canada's largest real estate investment trust. It owns and manages Canada's largest portfolio of shopping centers. RioCan owns an 80% interest in 31 grocery anchored and new format retail centers in the United States through various joint venture arrangements. In addition, RioCan owns 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. This stock is rated STA-2M by DBRS. Its web site is here RioCan. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.
Friday, March 2, 2012
Enbridge Inc 2
I know utilities are overpriced and I have a lot of utilities stock. I know there is a theory that you should sell when a stock is overpriced and then rebuy it when it is cheaper. The problem is I have found is that it is much easier to see you have an overpriced stock than to see and know when it is later better or underpriced. The thing is I have had overpriced stocks just muck around until they were at a relatively good price.
If you sell now at an overprice amount say $30, but buy back a later date at a relatively reasonable price of $30 are you further ahead? This can happen. Stock may or may not fall much to go from overpriced to reasonable price. The change in price is because ratios are better but this can occur over time as earnings, cash flow and book values increase, and not because of lower stock price.
To sell a stock when it is overpriced and buy it back later when it is not sounds great in theory, but I have not found that it works particularly well for me in practice. Not only getting a lower good price is a problem, but you pay fees at the sell and buy. Also, if the stock is in your trading account, you have to consider taxes.
Now back to Enbridge (TSX-ENB, NYSE-ENB), which is the stock I am discussing today. I have also done very well on this pipeline. I bought stock in 2005, 2008 and 2009. My total return is 20% per year. The portion attributable to dividends would be 3.48% per year or 17% of my total return.
When I look at insider trading I find $35M of insider selling and no insider buying. Insider selling is by CEO, CFO and officers. Everyone gets options, and all but directors have more options than shares. There is an awful lot options outstanding. The insider selling seems to be of options. Over the past 10 years, shares have grown by 1.9% per year. Over the past 3 years, growth has been due to DRIP and stock options. Stock options accounted for 34% of the increase in shares over this period or growth of .6% per year.
Accounting to Reuters there are 412 institutions holding 73% of the shares of this company. Over the past 3 months, they have bought and sold stock and their holdings are now lower by just under 1%.
I get 5 year median low and high Price/Earnings Ratios of 17.7 to 21.0. The current P/E of 23.2 would make the stock price relatively high. I get a Graham Price of $19.24. The current stock price of $38.26 is some 99% higher. The 10 year median high difference between the Graham Price and Stock price is the stock price being some 50% higher the Graham Price. By this measure the stock price is relatively high.
When I look at the Price/Book Value ratio I get a current one of 3.84, which is some 40% higher than the 10 year median of 2.77. This would point to a relatively high stock price. The current dividend yield at 2.96% is almost 10% higher than the 5 year median dividend yield of 3.26%. The current yield is just below the 10 year median low dividend yield 2.97%. This would also point to a rather high relative stock price.
The analysts’ recommendations that I find are Strong Buy, Buy, Hold and Underperform (or Reduce). The consensus would be a Buy recommendation. One Buy analyst said that he views Enbridge as a prudent pipeline operator. He expects that it will grow and that this will drive up the share price. The 12 months share price is given as $42. Another 12 month stock price is $40.38.
No one says anything bad about this company. Many think it is run well. One analyst said he expects the company to keep chugging along. I can only find one analyst that says the stock is overpriced. (My spreadsheet certainly says it is overpriced on a relative basis.)
Zacks Investment Research has a recent blog on why Enbridge Inc. is a buy. He mentions the solid dividend of 2.9%. Another analysts with a Hold recommendation said the dividend was only 2.9%. Another analyst thought you should not buy the stock until the dividend was closer to 3.5%. (The 10 year median dividend yield is 3.3%.) The web site Clean Break comments on Enbridge’s investment in Morgan Solar. CNBC has a 9 minute video clip on Enbridge including an interview with the CEO. Going to the site you will see a short commercial.
My Own Adviser blogger thought that Enbridge was a great stock for a DRIP. Dividend Ninja addresses the fact that utilities have high DRP and Debt Ratios. This includes stocks like Enbridge. Also, the Loonie Bin Blogger talks about his investment in Enbridge.
The CEO is also leaving Enbridge before the year end. See item on this at Akiraline. And is Rafe Mair reading too much into this?
I plan to continue to hold my shares of this company. I think that it is a great company and I do not sell just because a stock is overpriced. The stock market generally over or underprices stocks all the time. All the same, I would also like to see better debt ratios on this company.
Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.
If you sell now at an overprice amount say $30, but buy back a later date at a relatively reasonable price of $30 are you further ahead? This can happen. Stock may or may not fall much to go from overpriced to reasonable price. The change in price is because ratios are better but this can occur over time as earnings, cash flow and book values increase, and not because of lower stock price.
To sell a stock when it is overpriced and buy it back later when it is not sounds great in theory, but I have not found that it works particularly well for me in practice. Not only getting a lower good price is a problem, but you pay fees at the sell and buy. Also, if the stock is in your trading account, you have to consider taxes.
Now back to Enbridge (TSX-ENB, NYSE-ENB), which is the stock I am discussing today. I have also done very well on this pipeline. I bought stock in 2005, 2008 and 2009. My total return is 20% per year. The portion attributable to dividends would be 3.48% per year or 17% of my total return.
When I look at insider trading I find $35M of insider selling and no insider buying. Insider selling is by CEO, CFO and officers. Everyone gets options, and all but directors have more options than shares. There is an awful lot options outstanding. The insider selling seems to be of options. Over the past 10 years, shares have grown by 1.9% per year. Over the past 3 years, growth has been due to DRIP and stock options. Stock options accounted for 34% of the increase in shares over this period or growth of .6% per year.
Accounting to Reuters there are 412 institutions holding 73% of the shares of this company. Over the past 3 months, they have bought and sold stock and their holdings are now lower by just under 1%.
I get 5 year median low and high Price/Earnings Ratios of 17.7 to 21.0. The current P/E of 23.2 would make the stock price relatively high. I get a Graham Price of $19.24. The current stock price of $38.26 is some 99% higher. The 10 year median high difference between the Graham Price and Stock price is the stock price being some 50% higher the Graham Price. By this measure the stock price is relatively high.
When I look at the Price/Book Value ratio I get a current one of 3.84, which is some 40% higher than the 10 year median of 2.77. This would point to a relatively high stock price. The current dividend yield at 2.96% is almost 10% higher than the 5 year median dividend yield of 3.26%. The current yield is just below the 10 year median low dividend yield 2.97%. This would also point to a rather high relative stock price.
The analysts’ recommendations that I find are Strong Buy, Buy, Hold and Underperform (or Reduce). The consensus would be a Buy recommendation. One Buy analyst said that he views Enbridge as a prudent pipeline operator. He expects that it will grow and that this will drive up the share price. The 12 months share price is given as $42. Another 12 month stock price is $40.38.
No one says anything bad about this company. Many think it is run well. One analyst said he expects the company to keep chugging along. I can only find one analyst that says the stock is overpriced. (My spreadsheet certainly says it is overpriced on a relative basis.)
Zacks Investment Research has a recent blog on why Enbridge Inc. is a buy. He mentions the solid dividend of 2.9%. Another analysts with a Hold recommendation said the dividend was only 2.9%. Another analyst thought you should not buy the stock until the dividend was closer to 3.5%. (The 10 year median dividend yield is 3.3%.) The web site Clean Break comments on Enbridge’s investment in Morgan Solar. CNBC has a 9 minute video clip on Enbridge including an interview with the CEO. Going to the site you will see a short commercial.
My Own Adviser blogger thought that Enbridge was a great stock for a DRIP. Dividend Ninja addresses the fact that utilities have high DRP and Debt Ratios. This includes stocks like Enbridge. Also, the Loonie Bin Blogger talks about his investment in Enbridge.
The CEO is also leaving Enbridge before the year end. See item on this at Akiraline. And is Rafe Mair reading too much into this?
I plan to continue to hold my shares of this company. I think that it is a great company and I do not sell just because a stock is overpriced. The stock market generally over or underprices stocks all the time. All the same, I would also like to see better debt ratios on this company.
Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.
Thursday, March 1, 2012
Enbridge Inc
I own this stock (TSX-ENB, NYSE-ENB). I have also done very well on this pipeline. I bought stock in 2005, 2008 and 2009. My total return is 20% per year. The portion attributable to dividends would be 3.48% per year or 17% of my total return.
They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). My spreadsheet tells me that they have raised their dividends every year since 1997.
The 5 and 10 year growth in dividends over the past 5 and 10 years is 11.3% and 10.8% per year. The 5 year median dividend yield is 3.26%. The current dividend yield is almost 10% lower at 2.95%. For the stock I bought in 2005, 7 years ago, my dividend yield on my original purchases price is 6.3%.
If you had invested in this stock 5 and 10 years ago, you total return would probably have been around 16.5% and 16.6% per year, respectively. The return attributed to dividends over the past 5 and 10 years would probably be around 2.9% and 3.2% respectively. The portion of the return attributed to dividend over the past 5 and 10 years would probably be 17.7% and 18.9%, respectively.
The Dividend Payout Ratios are good. The 5 year median DPRs for earnings is 63% and for cash flow is 33%. The DPRs for 2011 were 75% and 28%. For 2012, they are expected to be 68% and 33%.
Growth is quite good for this company. The growth in revenue per shares was 10.3% and 14.7% per year over the past 5 and 10 years. The growth in EPS was 7.8% and 6% per year over the past 5 and 10 years. The growth in Cash Flow was 12.8% and 16.9% per year over the past 5 and 10 years. The growth in Book Value was 9.4% and 9.7% per year over the past 5 and 10 years.
The Return on Equity for 2011 was 12.7%. The 5 year median ROE was 13.6%. The ROE based on comprehensive income was lower at 10% with a 5 year median also at 10%. This ROE was still within the good range of 10% to 15%.
This utility company has lots of debt which is very common for utility companies. The Liquidity Ratio is the worse coming in at 0.88 with a 5 year median value of 0.93. The Company was in compliance with all debt covenants at the end of December 2011. Asset/Liability Ratios are a bit low with a ratio of 1.39 at the end of 2011 and a 5 year median value of 1.40.
The current Leverage ratio at 4.41 is higher than the 5 year median value of 4.00. The current Debt/Equity Ratio at 3.17 is also higher than the 5 year median value of 2.77. Both these current ratios are rather high. I would be happier with this stock if debt ratios were lower.
I have had very good returns with this stock, I certainly cannot complain. I am concerned about debt, but I find no other analyst that is worried. However, one did suggest that maybe raising money soon and one of the options would be to issue more shares.
Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.
They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). My spreadsheet tells me that they have raised their dividends every year since 1997.
The 5 and 10 year growth in dividends over the past 5 and 10 years is 11.3% and 10.8% per year. The 5 year median dividend yield is 3.26%. The current dividend yield is almost 10% lower at 2.95%. For the stock I bought in 2005, 7 years ago, my dividend yield on my original purchases price is 6.3%.
If you had invested in this stock 5 and 10 years ago, you total return would probably have been around 16.5% and 16.6% per year, respectively. The return attributed to dividends over the past 5 and 10 years would probably be around 2.9% and 3.2% respectively. The portion of the return attributed to dividend over the past 5 and 10 years would probably be 17.7% and 18.9%, respectively.
The Dividend Payout Ratios are good. The 5 year median DPRs for earnings is 63% and for cash flow is 33%. The DPRs for 2011 were 75% and 28%. For 2012, they are expected to be 68% and 33%.
Growth is quite good for this company. The growth in revenue per shares was 10.3% and 14.7% per year over the past 5 and 10 years. The growth in EPS was 7.8% and 6% per year over the past 5 and 10 years. The growth in Cash Flow was 12.8% and 16.9% per year over the past 5 and 10 years. The growth in Book Value was 9.4% and 9.7% per year over the past 5 and 10 years.
The Return on Equity for 2011 was 12.7%. The 5 year median ROE was 13.6%. The ROE based on comprehensive income was lower at 10% with a 5 year median also at 10%. This ROE was still within the good range of 10% to 15%.
This utility company has lots of debt which is very common for utility companies. The Liquidity Ratio is the worse coming in at 0.88 with a 5 year median value of 0.93. The Company was in compliance with all debt covenants at the end of December 2011. Asset/Liability Ratios are a bit low with a ratio of 1.39 at the end of 2011 and a 5 year median value of 1.40.
The current Leverage ratio at 4.41 is higher than the 5 year median value of 4.00. The current Debt/Equity Ratio at 3.17 is also higher than the 5 year median value of 2.77. Both these current ratios are rather high. I would be happier with this stock if debt ratios were lower.
I have had very good returns with this stock, I certainly cannot complain. I am concerned about debt, but I find no other analyst that is worried. However, one did suggest that maybe raising money soon and one of the options would be to issue more shares.
Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge. See my spreadsheet at enb.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 for stocks followed and investment notes. Follow me on twitter.
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