Tuesday, September 16, 2014

Just Energy Group Inc.

I do not own this stock of Just Energy Group Inc. (TSX-JE, NYSE-JE). I started to follow this is July 2010. It was one of the high yield income trusts that people were talking about, so I decided to check it out. However, I never liked its business plan and I like even less that the book value is negative.

As far as dividends goes, this company has just reduced their dividends by 40.5% and changed the dividend payments to quarterly from annually. I noticed a number of analysts now feel that this new dividend is sustainable, even though no one seems to suggest that the company will be making a profit for the next financial year ending in March 2015.

If you look at dividend growth over the past 5 and 10 years, it is at a negative 7.4% and a positive 1.6% growth over these periods. Because of negative profit in 2012, the 5 year median Dividend Payout Ratios are not valid. The DPR for EPS in the 2014 financial year is 89% and for CFPS is 95%. The DPR for Distributable Income is at 112% for the 2014 financial year.

The problem with EPS is that this value over the past has been all over the place; that is it has varied greatly year to year. Another problem is that the EPS/CF Ratio has been over 1.00 four times in the last 5 years. This is not a good sign. This ratio should be under 1.00. You want the CFPS to be higher than EPS.

Outstanding shares have increased by 5.2% and 3.4% per year over the past 5 and 10 years. The shares have increased due to DRIP, Stock Options and Share Issues. They have decreased due to Buy Backs. Revenues have grown over the past 5 and 10 years, but the company cannot seem to grow the earnings and cash flows with the growing revenues.

Revenues per share are up by 8% and 13.4% per year over the past 5 and 10 years. EPS is down by 15% and up by 17% over the past 5 and 10 years. Cash flow is down by 10% and up by 2% per year over the past 5 and 10 years.

On some basis, the current stock price is cheap. I guess the Graham Price is around $6.22. With a current price of $6.03 that would give this stock a P/GP Ratio of 0.97. This low ratio points to a cheap stock price on an absolute basis. It would also point to a cheap stock price on the basis of the 10 year low, median and high median P/GP Ratios of 1.10, 1.43 and 1.83.

The 10 year Price/Cash Flow per Share Ratio is 10.50 and the current P/CF Ratio at 7.44 is some 29% lower and points to a relatively cheap stock price. However, a P/CF Ratio of 7.44 is not cheap on an absolute basis.

The 10 year Price/Sales Ratio is 0.77 and the current P/S Ratio of 0.25 is some 68% lower. This low ratio points to relatively cheap stock price. On an absolute basis, a P/S Ratio is 0.25 is quite low and also points to a cheap stock price.

When I look at analysts' recommendations, I find Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price is $6.19. This implies total returns of 10.95% with 2.65% from capital gains and 8.29% from dividends. However, can we be sure that this new dividend rate will hold up?

Sound bit for Twitter and StockTwits is: Book Value is negative. I wonder if I need to say more about why I do not like this stock besides the book value is negative. Even with a cheap stock price, is it worth the risk of buying this stock? I do not see that risk and reward is in balance. See my spreadsheet at je.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Just Energy's business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The company also offers "green" products through its Just Green program. Through its subsidiary Terra Grain Fuels, the Fund produces and sells wheat-based ethanol. Its web site is here Just Energy.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, September 15, 2014

High Liner Foods 2

On my other blog I am today writing about my dividends covering the cost of my stock continue...

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication's site is here. Ryan Irvine of Keystone also likes this company.

When I look at insider trading, I find insider selling at $3.2M and net insider selling at $3M. There is a bit of insider buying. Insider selling is just 0.47% of the market cap of this stock and so is a relatively small amount.

There is insider ownership with the Hennigar Family's holding company owning some 38% of the outstanding stock and worth some $275M. The CEO owns shares worth around $11M and the Chairman, who is of the Hennigar Family, owns shares worth around $4.7M.

In 2013, outstanding shares were increased by 157,000 for stock options. These stock options had a book value of $1.4M. This number of shares was worth $3.7M at the end of 2013 and would be some 0.52% of the outstanding shares. Stock Options for 2013 at 0.52% of the outstanding shares are a relatively reasonable percentage.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.59, 12.73 and 13.87. These are lower than the corresponding 10 year values of 12.75, 14.42 and 15.66. The current P/E Ratio is 14.42 based on a stock price of $21.20 and 2014 EPS estimate of $1.47 CDN$ (or $1.35 US$). This test says that the stock price is relatively reasonable.

A problem I see with EPS is that analysts had expected the EPS to grow by almost 35% in 2014 over 2013. We are into the Quarter 2 of 2014 and if you look at the 12 month EPS to the end of June 2014 compared to the 12 month EPS to the end of 2013, EPS is only up almost 8%. It makes you wonder about this company meeting the 2014 earnings estimates.

I get a current Graham Price of $15.16. The 10 year low, median and high median Price/Graham Price Ratios are 0.78, 0.86 and 0.99. The current P/GP Ratio is 1.40. This test says that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratios is 1.34 and the current P/B Ratio at 3.05 is some 127% higher. The current P/B Ratio is based on a stock price of $21.20 and BVPS of $6.95. This test says that the stock price is relatively expensive.

The 5 year median Dividend Yield is 2.58% and the current Dividend Yield at 1.98% is some 23% lower. This test says that the stock price is relatively expensive. However the historical average Dividend Yield is 2.41% and the historical median Dividend yield is 2.15%. These are some 18% and 8% higher than the current Dividend Yield. These tests say that the stock price could be relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations, with the consensus being a Hold recommendations as there are more Hold recommendations than Buy recommendations. The 12 month consensus stock price is $24.80. This implies a total return of 18.96% with 16.98% from capital gains and 1.98% from dividends.

There is a CBC News article on a challenging second quarter for this company. It also talks about how the company might be affected by sanctions on Russia. There is a recent positive article on this company at Seeking Alpha.

Sound bit for Twitter and StockTwits is: Stock price could be expensive. I do like this stock, but I think that it is currently getting a little pricey. See my spreadsheet at hlf.htm.

This is the second of two parts. The first part was posted on Friday, September 12, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

High Liner Foods is the leading North American processor and marketer of value-added frozen seafood. Their retail branded products are sold throughout the United States, Canada and Mexico and are available in most grocery and club stores. They also sell their branded products to restaurants and institutions and they are the major supplier of private label value-added frozen seafood products to North American food retailers and food service distributors. Its web site is here High Liner Foods.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, September 12, 2014

High Liner Foods

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication’s site is here. I have been meaning to look at it for a while. Ryan Irvine of Keystone also likes this company.

This company has been around for quite a while, but they just started to pay dividends in 2004. The Dividend Payout Ratios, especially for EPS has varied a lot of the years. The 5 year DPRs for EPS and CFPS are at 33% and 17%. The 2013 DPRs for EPS and CFPS are at 36% and 18.5%.

The current dividend yield is decent at 1.98% and the growth in dividends has been very good. The dividends have increased by 26% and 15% per year over the past 5 and 9 years. They increased the dividend again in 2014 with a 20% increase.

The shareholders total return has also been very good. The 5 and 10 year total returns are at 38.56% and 17.10% per year with 35.60% and 15.38% per year from capital gains and 2.97% and 1.72% per year from dividends.

The Outstanding Shares have decreased by 4.5% and increased by 3.4% per year over the past 5 and 10 years. The shares have increased due to Debenture Conversions, Share Issues and Stock Options. They have decreased due to Buy Backs.

The Revenues and Cash Flows has been growing well. Earnings have done well over the past 5 year, but not over the past 10 years. The company also reports an Adjusted Net Income and some analysts think that it better reflects on how the company is really doing as far as earnings go. Also, this company just started to report in US$ in 2012.

Revenues are up by 10.5% and 12.4% per year over the past 5 and 10 years. Revenue per Share is up by 15.6% and 8.6% per year over the past 5 and 10 years.

EPS is up by 22.8% and down by 6.3% per year over the past 5 and 10 years. The Adjusted EPS is up by 23% and 12% per year over the past 5 and 10 years. Net Income is up by 18.8% and down by 3.13% per year over the past 5 and 10 years.

The Return on Equity has only been below 10% once in the past 5 years. The 5 years before, that is 6 to 10 years ago, it did not break the 10% level.

Cash Flow is up by 19% and 12% per year over the past 5 and 10 years. CFPS is up by 24.6% and 8.6% per year over the past 5 and 10 years. The ROE for 2013 was 17% and the 5 year median ROE is at 12.6%. The ROE on comprehensive income is close with a ROE for 2013 at 16.5% and a 5 year median ROE at 12%.

The debt ratios are generally good. The Liquidity Ratios for 2013 was 1.73. The Debt Ratio for 2013 is at 1.38 with a 5 year median at 1.35. This is acceptable, although a bit lower than I would like. Leverage and Debt/Equity Ratios are a bit higher than what I would like with 2013 values at 3.66 and 2.66.

Sound bit for Twitter and StockTwits is: Consumer Discretionary Dividend Growth Stock. See my spreadsheet at hlf.htm.

This is the first of two parts. The second part will be posted on Monday, September 15, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

High Liner Foods is the leading North American processor and marketer of value-added frozen seafood. Their retail branded products are sold throughout the United States, Canada and Mexico and are available in most grocery and club stores. They also sell their branded products to restaurants and institutions and they are the major supplier of private label value-added frozen seafood products to North American food retailers and food service distributors. Its web site is here High Liner Foods.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, September 11, 2014

Exchange Income Corp.

I do not own this stock of Exchange Income Corp. (TSX-EIF, OTC-EIFZF). One of my blogger readers suggested this stock as one to review. There was an interesting article about this stock in the G&M in May 2013. This article suggested that the company had a hefty yield with an acquisition tailwind. This article is available here.

This company has been on the stock exchange since 2004. They have been inconsistent in increasing the dividends. The dividend increases were better before 2008 than after that date. The 5 and 9 year dividend growth is at 2.22% and 6.18% per year. The last time I checked inflation it was running at 1.50% over the past 10 years and slightly lower over the past 5 years.

The dividend yield is still very high on this old income trust company. The current dividend yield is running at 8.51% currently. It was expect that income trust companies would end up with dividend yields between 4 and 5% from increases in stock prices and/or dividend decreases. The company did not decrease their dividends on the change to a corporation; they have just really slowed the dividend increases.

The Dividend Payout Ratios are still very high for this company. The 5 year median DPR for EPS is at 132% and the one for 2013 was at 400%. It is expected to be around 158% in 2014. The DPR for CFPS is better with a 5 year median of 58% and the DPR for 2013 at 58%.

The total return for shareholders has been quite good. The 5 and 10 year total return is at 19.67% and 20.41% per year with 8.85% and 8.35% per year from capital gains and 10.82% and 12.07% per year from dividends.

The outstanding shares have increased by 17% and 42% per year over the past 5 and 10 years. The shares have increased due to Debenture Conversions, Stock Options, DRIP and Share Issues. Revenues and Cash Flows have increased nicely, but Earnings have not. Because of big increase in outstanding shares, the most important increases are in the per share values.

Revenues have increased by 46% and 55% per year over the past 5 and 9 years. However, Revenue per Share has only increased by 24% and 13% per year. Cash Flow has increased by 28% and 45% per year over the past 5 and 9 years. CFPS has increased by 9% and 5.8% per year over the past 5 and 9 years.

Unfortunately, although earnings are up EPS is down. The Net Income has increased by 23 and 25% per year over the past 5 and 9 years. However, EPS is down by 5.3% and 6.9% per year over the past 5 and 9 years.

Return on Equity only broke through the 10% mark once in the past 5 years and that was 5 years ago. The ROE for 2013 was just 2.9% and the 5 year median was at 9%. The ROE on comprehensive income was a bit better for 2013 at 5.4% and its 5 year median is 8.5%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.62, 17.81 and 20.99. The 10 year values are lower at 11.77, 13.40 and 15.03. The current P/E Ratio is 18.61 based on a stock price of 19.73 and 2014 earnings estimates of $1.06. This stock price testing suggests that the stock price is relatively reasonable.

However, the P/E Ratios have been moving up quite a bit and this generally does not suggest a stock is at a good price. Although a P/E Ratio of 18.61 is not high, however, it does not point to a cheap stock. Also, the EPS estimates are an increase of some 152% over that for 2013. If you look at EPS for the last 12 months, it is lower than the 12 months earnings to end of 2013.

I get a Graham Price of $17.49. The 10 year Price/Graham Price Ratios are 0.76, 0.89 and 1.00. The current P/GP Ratio is 1.13 based on a stock price of $19.73. This stock price test suggests that the stock price is relatively high.

The 10 year Price/Book Value per Share Ratio is 1.36. The current P/B Ratio is 1.54 a value some 13% higher. This suggests that the stock price is relatively reasonable but a bit on the high side of the reasonableness range.

The 5 year median Dividend Yield is 7.43% and the current Dividend Yield is some 15% higher at 8.51%. This stock price test suggests that the stock price is reasonable.

When I look at analyst's recommendations, I find Strong Buy, Buy and Hold Recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $25.80. This implies a total return of 39.28% per year with 30.77% from capital gains and 8.51% per year from dividends.

In an G&M article, the CEO challenges critic over the earning power of his company. The negative reporting from G&M is here. Some people think that the dividend is in jeopardy.

Sound bit for Twitter and StockTwits is: I would like better EPS growth. It would seem that the company is not producing good growing EPS. In the long term, the production of good growing EPS is the most important. See my spreadsheet at eif.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Exchange Income Corporation was created to invest in profitable, well-established companies with strong cash flows operating in niche markets in Canada and/or the United States and to distribute stable monthly cash dividends to its shareholders. The Company currently owns subsidiaries in two niche business segments, aviation and specialty manufacturing. Its web site is here Exchange Income Corp.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, September 10, 2014

Chemtrade Logistics Income Fund

On my other blog I am today writing about my 3 blogs and my web site continue...

I do not own this stock of Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF). I decided to investigate this stock after reading an article in the G&M in February 2012 about investing in small cap stocks that pay dividends. This was one of the stocks mentioned that I had never heard of before.

This company has purchased General Chemical Holding Company. An article in the Financial Post says that Chemtrade doubles in size with the purchase of General Chemical.

This company gave out dividend increases from their start in 2001 until 2007. They decreased the dividends in 2007 by just over 16%. The dividends have been flat since 2007. The 5 and 10 years change in is dividends are flat for the past 5 years and dividends were decrease by 1% per year over the past 10 years. Some analysts do expect dividends to start to rise again in 2014, but so far I see no sign of that.

The company was an income trust back when it started. The distributions or dividends were, of course, much higher than the EPS. They are still paying out higher dividends than EPS with the 5 year median Dividend Payout Ratio at 105% and the DPR for 2013 at 923%. They earned little last year. The DPR for EPS for 2014 is expected to be187% and for 2015 it is expected to be 103%.

The 5 year DPR for CFPS is at 53% and the DPR for CFPS for 2014 was at 46%. If dividends do not change it is expected to be around 36% this year. The DPR for 2013 for AFFO is 46% and for FFO is 66%. I know people are still looking at AFFO and FFO for this stock, but it is now a corporation, no matter what the name says.

The dividends are still quite high on this stock with the current dividend yield at 5.64% and the 5 year median at 8.98%. It was expected after the income trust tax changes were announced in late 2006 that income trust dividend yields would go down to around 4 to 5% because of stock price increases and/or dividend cuts. This stock hit a high of dividend yields in 2006 of 14.3% and since then they have been gradually declining.

Shareholders have not done badly with this stock over the past 5 and 10 years. The 5 and 10 years total returns are at 22.76% and 6.80% per year with 14.08% and 0.47% per year from capital gains and 8.68% and 6.33% per year from dividends.

The Return on Equity was lower than 10% only once in the last 5 years and that year was 2013 when it was just 1.8%. The 5 year median is 17.8%. The ROE on comprehensive income was 11.9% in 2013. Some of the financing costs of acquiring General Chemical Holding Company were written off in 2013 and this is the main reason for the low EPS in 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 8.71, 11.00 and 13.28. The comparable 10 year ratios are 13.91, 15.68 and 17.45. The current P/E Ratio is 33.23 based on a stock price of $21.27 and 2014 earnings of $0.64. The P/E Ratio for 2015 is 18.34 based on a stock price of $21.27 and 2015 EPS of $1.16. No matter how you look at P/E Ratio testing, it shows that the stock price is relatively expensive.

I get a Graham price of $12.16 and the 10 year Price/Graham Price Ratios ae 0.96, 1.11 and 1.27. The current P/GP Ratio is 1.75. This stock price test says that the stock price is relatively high.

The 10 year Price/Book Value per Share Ratio is 1.75 and the current P/BV Ratio at 2.07 is some 20% higher. This is based on a stock price of $21.27 and BVPS of $10.26. This stock price test says that the stock price is relatively high.

I cannot use the dividend yield to look at the stock price because this stock used to be an income trust. However, it is interesting to see that looking at Price/Cash Flow per Share Ratios shows that the current stock price is reasonable. The 10 year P/CF Ratio is 6.39 and the current P/CF Ratio is 6.39.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Hold, so the consensus recommendations would be a Hold. The 12 month stock price consensus is $21.60. This implies a total return of 7.19% with 5.64% from dividends and 1.55% from capital gains.

Sound bit for Twitter and StockTwits is: Stock is probably expensive. The current stock price does look relatively high on a lot of measures. However, a lot of analysts seem to be excited by this company's purchase of General Chemical Holding Company and feel that it will be very good for the long term for this company.

The purchase of General Chemical Holding Company seems to be depressing the EPS. However, it is not depressing the CFPS. See my spreadsheet at che.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

This company is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky has operations in Western Canada, Eastern Canada, US, China, Indonesia and Greenland. This company is mostly foreign owned. Industry: Oil and Gas (Integrated Oils). It is listed under TSX Energy Index. Its web site is here Chemtrade Logistics.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, September 9, 2014

Calloway Real Estate Investment Trust 2

I do not own this stock of Calloway Real Estate Investment Trust (TSX-CWT.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Unfortunately, this stock is no longer on the Dividend Achiever's List.

When I look at insider trading, I find no action for the past year. There does not seem to be much in the way of outstanding stock options or insider ownership. However, there are convertible debentures and special voting units outstanding. Special voting units are almost 20% of the outstanding units. The SVUs are not part of the outstanding units, but have voting rights. The difference between basic and diluted outstanding units was mostly influenced by convertible debentures.

As far as stock options go, the outstanding shares were increased by around 240,000 units for these on 2013. They have a Book Value $8M and this number of shares were worth some $6M at the end of 2013. This number of shares is only 0.18% of the outstanding shares. The outstanding shares were increased a relatively small percentage for stock options in 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.44, 16.94 and 18.45. The current P/E Ratio is 13.72 based on a stock price of $26.62 and 2014 earnings estimate of 1.94. This stock price test would suggest that the stock price is relatively cheap.

Since this is an income trust, we should also look at the Price/AFFO Ratios. The 5 year median P/AFFO Ratio is 15.30. The current P/AFFO Ratio is 15.30 based on AFFO estimate for 2014 of $1.74 and current stock price of $26.62. This stock price test would suggest that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 1.54. The current P/B Ratio is 1.10 based on a stock price of $26.62 and current BVPS of $24.10. The current P/B Ratio is some 28% lower than the 10 year median ratio. This stock price test would suggest that the stock price is relatively cheap.

The 5 year median yield is 6.96% and the current dividend yield at 6.01% is some 16% lower. This stock price test would suggest that the stock price is relatively reasonable, but towards the higher end of the reasonableness range. The historical average dividend yield is 9.64% and this is some 37% above the current dividend yield and says the stock price is expensive.

However, if you use the historical median dividend yield, which is 6.29%, the current dividend yield is just 4.5% lower. This stock price test would suggest that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold Recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price is $28.60. This implies a total return of 13.45% with 6.01% from dividends and 7.44% from capital gains.

According to a Motley Fool article this REIT as well as Boardwalk REIT (TSX-BEI.UN) and RioCan Real Estate Investment (TSX-REI.UN) are current good buys. The blogger Passive Income Earner has a recent good article about buying Canadian REITs.

Sound bit for Twitter and StockTwits is: Stock price is probably reasonable. A number of stock price tests shows that the stock price is reasonable. I still do not like the complex ownership under this stock. However, it is a good sign that dividends were raised in 2014. See my spreadsheet at cwt.htm.

This is the second of two parts. The first part was posted on Monday, September 08, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway REIT.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, September 8, 2014

Calloway Real Estate Investment Trust

On my other blog I am today writing about a possible different way of viewing dividends continue...

I do not own this stock of Calloway Real Estate Investment Trust (TSX-CWT.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Unfortunately, this stock is no longer on the Dividend Achiever's List.

This company started to pay dividends in 2002, but only for two months. The company increased their dividends until 2008 and then increases stopped. So dividends were flat for 5 years. At the end of this year, this company has again started to raise dividends and dividends or distributions were increased by 3.1%.

Between 2008 and 2012, this company was paying out too high a percentage of their earnings and especially more critical for a REIT, too high a percentage of their cash flow. For 2013, the Dividend Payout Ratios are a lot better with the DPR for EPS at 66.5% and the DPR for CFPS at 91.4%. Lots of analysts also look at DPR for FFO and AFFO. The DPR for FFO for 2013 was at 83.4% and for AFFO was at 88%.

Of course, this REIT was not the only one with problems with distributions between 2008 and 2013. RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) had a few years of no increases, Canadian Real Estate Trust (TSX-REF.UN, OTC-CRXIF) had some very low increases and H&R Real Estate (TSX-HR.UN, OTC-HRUFF) decreased their dividends in 2009.

When looking at dividends over the longer term, dividends are up by 3% per year over the past 10 years. However, they are up by 0% over the past 5 years. But with the 10 year increase, the dividends are up by the rate of background inflation and this is not bad for a REIT. REITs tend to have good dividend yields and this REIT has a current yield of 6% and the 5 year median dividend yield is 6.96%.

Shareholders have not done badly over the past 5 and 10 years. The total return over these periods is at 13.51% and 10.60% per year with 6.41% and 3.57% per year from capital gains and 7.10% and7.03% per year from dividends.

The number of outstanding trust units or shares has increased a lot over the past 5 and 10 years. The shares have increased by 7.1% and 28.1% per year over the past 5 and 10 years. Increasing shares are not a problem in themselves, but it does mean that investors should be very interested in per share values. That is the growth in Revenue per Share is important for the shareholder rather than growth in Revenue per se.

Revenue, earnings and cash flow have grown nicely. It is interesting that there is for this company comparatively little growth in Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). These are measures that a lot of analysts are interested in for REITs.

Revenues have grown by 5.6% and 46% per year over the past 5 and 10 years. The Revenue per Share has grown at a negative 1.4% and positive 14.1% per year over the past 5 and 10 years. (However, if you look at the 5 and 10 year running averages, Revenue per Share has grown at 4.3% and 9.5% per year over the past 5 and 10 years.)

EPS has grown at 19.62% and 6.08% per year over the past 5 and 10 years. However, a lot of this growth is due to the change in Accounting Rules from Canadian GAAP to IFRS rules. FFO has only grown by 0.5% and 4.2% per year over the past 5 and 10 years. AFFO has only grown at 0.7% and 3.51% per year over the past 5 and 10 years.

Cash Flow has grown at 6.8% and 39.8% per year over the past 5 and 10 years. CFPS has declined by 0.3% per year over the past 5 years and has increased by 9.2% per year over the past 10 years. If you look at 5 year running averages over these periods, the CFPS is better at 3.3% and 14.7% per year over the past 5 and 10 years.

The Return on Equity is not great, with the ROE for 2013 at 8.5%. However, the ROE on comprehensive income is the same. The ROE has been lower than 8%, 3 of the past 5 years.

The Liquidity Ratio is rather low at just 0.27. If it is not at 1.00, it means that current assets cannot cover current liabilities. However, if you take off the current portion of the long term debt and add in cash flow after dividends this ratio comes in at 1.03. The Debt Ratio is very good at 2.16. The Leverage and Debt/Equity Ratios are good also at 1.86 and 0.86.

Sound bit for Twitter and StockTwits is: Dividend Growth REIT with recent modest div increase. After a number of years of no dividend increases, it is nice that this REIT can now afford one. I still have reservations about the ownership structure of this REIT with the Limited Partnership and Special Voting units. My complaint is that it is complicated. See my spreadsheet at cwt.htm.

This is the first of two parts. The second part will be posted on Tuesday, September 9, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. Its web site is here Calloway REIT.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, September 5, 2014

Badger Daylighting Ltd.

I do not own this stock of Badger Daylighting Ltd. (TSX-BAD, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at what stocks might appeal to a conservative investor looking for income.

This stock used to be an income trust. They cut their dividends in 2011 as a number of income trust companies did when changing over to a corporation. The dividends were cut some 19%. However, they have started to raise their dividends again and in 2012 they increased the dividends by 5.9%. In 2013 and so far in 2014 they have done no dividend increase.

Even before switching from an income trust, they were inconsistent in raising dividends. There was no dividend raise between 2007 and 2010. However, tax law changes for income trusts were announced in October 2006. This could explain the lack of increases then. I cannot find any intent of what the company will do with dividends and analysts do not mention what they expect from dividends.

However, the Dividend Payout Ratios are good on this stock. The 5 year DPR for EPS is at 43.7% and for CFPS is at 25.7%. The DPR for 2013 for EPS is at 33% and for CFPS is at 19.1%. The DPR is expected to be even lower for 2014.

Shareholders have done very well with this stock. The stock price was up over 40% in 2012 and up by over 175% in 2013. This has slowed as stock is up just over 2% for 2014. The 5 and 10 year total return on this stock is at 48.12% and 21.23% per year with 43.67% and 17.52% per year from capital gains and 4.45% and 3.71% per year from dividends. Analysts do expect further gains as the 12 months consensus stock price is at $37.00 which is around a 27% rise from today's price.

The Return on Equity was been above 10% each year over the past 10 years. However, prior to 10 years ago, it had a hard time breaking into this range. The ROE for 2013 is at 23.6% and the 5 year median is also 23.6%. The ROE on comprehensive income is slightly higher at 26.8% and this is, of course, a very good sign.

Debt ratios are also good, with the current Liquidity Ratio at 2.42, the Debt Ratio at 2.05 and the Leverage and Debt/Equity Ratios at 1.95 and 0.95.

The 5 year low, median and high median Price/Earnings per Share Ratios are 7.60, 9.38 and 11.17. The corresponding 10 year median P/E Ratios are just slightly higher. The current P/E Ratio is 22.91 based on a stock price of $29.10 and 2014 earnings estimate of $1.27. On a relative basis, the current stock price is expensive. However, a P/E Ratio of 22.91 is not particularly high.

I get a Graham Price of $11.92. The 10 year low, median and high median Price/Graham Price Ratios are 0.90, 1.18 and 1.45. These are rather high ratios for this sort of company. The current P/GP Ratio is 2.44 and however you look at it this ratio shows that this stock is relatively and absolutely expensive using this ratio.

The 10 year Price/Book Value per Share is 3.03. The current P/B Ratio is 7.23 based on a stock price of $29.10 and BVPS of $4.97. The current P/B Ratio is some 93% higher than the 10 year median P/B Ratio. This stock price test says that the stock price is relatively expensive. A P/B Ratio of 7.23 is also on the high side.

Since this was an old income trust stock, using the dividend yield for testing would not be a fair test. However, I can use the Price/CP Ratio test. The 10 year P/CF Ratio is 6.09. The current P/CF Ratio at 12.76 is some 110% higher. This stock price test says that the stock price is relatively expensive. Also a P/CF Ratio of 12.76 is a rather high one.

When I look at the analysts' recommendations, I find only two analysts following this stock and they have recommendations of Strong Buy and Buy. The consensus is a Strong Buy. The 12 month consensus stock price is $37.00 and this implies a total return of 28.38% with 27.15% from capital gains and1.24% from dividends.

The site WKRB recently talked about analysts' ratings on this stock.

Sound bit for Twitter and StockTwits is: Not a great dividend stock and expensive. I like dividend growth stock and this stock is not at the moment such a stock. I also think that the stock price is high, but who knows, money could be made while this stock has momentum. Even this might have past as the TSX has been slowly rising over the past 3 months while this stock has been falling. See my spreadsheet at bad.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow. If this stock turns into a dividend growth stock, I will do more entries on it in the future.

Badger is North America's largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in the utility and petroleum industries. Badger's business model involves the provision of excavating services through two distinct entities: the Operating Partners (franchisees in the United States and agents in Canada), and Badger Corporate. Its web site is here Badger Daylighting Ltd..

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, September 4, 2014

ATCO Ltd. 2

I do not own this stock of ATCO Ltd. (TSX-ACO.X, OTC-ACLLF). I started to look at this stock because it was a dividend paying stock that was on everyone's list. This stock is on the Dividend Achievers list, the Dividend Aristocrats list and also was on Mike Higgs' list.

When I look at insider trading I find insider selling at $8.9M and insider buying at $0.9M and net insider selling at $8M. It may seem like a lot of insider selling but net insider selling is at just 0.15% of the market cap of this stock.

This stock has two classes of share, one voting and one non-voting. The voting shares are mostly owned by the Southern family and they therefore control the company. They do have a lot invested in the company with Ronald D. Southern owning shares worth over $1.7B in Class I and Class II shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.04, 10.74 and 12.05. The corresponding 10 year figures are slightly higher. The current P/E Ratio is 13.55 based on a stock price $46.88 and 2014 earnings estimate of $3.46. This stock price test suggests that this stock is relatively expensive.

I get a Graham Price of $44.84 and the 10 year low, median and high median Price/Graham Price Ratios are 0.77, 0.89 and 1.00. The current P/GP Ratio is 1.05 based on a stock price of $46.88. This stock price test suggests that this stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.61. The current P/B ratio is 1.82 a value some 13% higher and based on a stock price of $46.88 and current BVPS of $25.82. This stock price test suggests that this stock is relatively reasonable although a bit on the high side.

The 5 year dividend yield is 1.88% and the current dividend yield of 1.83% is just 2.5% lower. This stock price test suggests that this stock is relatively reasonable. The historical average dividend yield is 2.27% a value some 19% higher and the historical median dividend yield is 2.08% a value some 12% higher. These stock price tests suggest that this stock is relatively reasonable although a bit on the high side.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation is a Hold. Most of the recommendations are a Hold. The 12 month stock price is $52.80. This implies total return of 14.46% with 12.63% from capital gains and 1.83% from dividends.

A recent article in Forbes says that this stock is oversold because the current RSI reading is 29.3. The stock price has been falling since its peak in April of 2014. (The meaning of "oversold" is that people having been doing too much selling of this stock. It suggests that it may be time to buy this stock.)

Sound bit for Twitter and StockTwits is: Stock price seems a bit high. I think that the stock price seems a big high as it is for a lot of utility stocks. See my spreadsheet at aco.htm.

This is the second of two parts. The first part was posted on Wednesday, September 03, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, September 3, 2014

ATCO Ltd.

On my other blog I am today writing about possible cheap dividend stocks for September 2014 continue... I do not own this stock of ATCO Ltd. (TSX-ACO.X, OTC-ACLLF). This is a dividend paying stock that is on everyone's list. This stock is on the Dividend Achievers list, the Dividend Aristocrats list at and also was on Mike Higgs' list.

The dividend is moderate and the growth is fairly good. The current dividend yield is 1.84% and the 5 year median dividend yield is 1.88%. The 5 and 10 year dividend growth is at 9.8% and 8.9% per year. The most recent dividend increase was for 2014 and it was for 14.7%. In fact the last three dividend increases has been around this higher value.

The Dividend Payout Ratios are quite good with 5 year median rates at 20.5% for EPS and 4.6% for CFPS. The corresponding DPR for 2013 are at 24.9% for EPS and 4.6% for CFPS.

There has been no growth in outstanding shares over the past 5 and 10 years. Shares have increased due to Stock Options and they have decreased due to Buy Backs. The one problem I see for this stock is that the growth in EPS and Cash Flow is much higher than the growth in revenue over the last 5 and 10 years. The company must increase their revenue or growth in earnings and cash flow must fall.

Revenue per Share has grown at 6% and 1.4% per year over the past 5 and 10 years. The 5 and 10 year growth using 5 year running averages is not much different at 5.2% and 2% per year over the past 5 and 10 years. The EPS has grown at 9.2% and 12.8% per year over the past 5 and 10 years. Cash Flow per Share has grown at 15% and 12.9% per year over the past 5 and 10 years.

The shareholders of this stock have done well in total return over the past 5 and 10 years. The total return over the past 5 and 10 years is at 17.28% and 14.51% per year. The portion of this total return attributable to capital gains is at 15.11% and 12.30% per year. The portion of this total return attributable to dividends is at 2.17% and 2.21% per year.

The Return on Equity has been over 10% each year of the past 10 years. The ROE for 2013 is at 14.6% and the 5 year median ROE is also 14.6%. The ROE for comprehensive income for 2013 is at 18.3% and its 5 year median is at 13.1%.

The debt ratios are fine, with the Liquidity Ratio a bit low as they depend on cash flow to get a good Liquidity Ratio. The Liquidity Ratio for 2013 is at 1.38 and with the cash flow after dividends at 2.94. The Debt Ratio is good at 1.60. The Leverage and Debt/Equity Ratios are fine at 2.66 and 1.66.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. As I point out above, revenue is growth faster than earnings and cash flow. However, analysts do see better growth in revenue over the next few years, but there was not much grown to the end of the second quarter in 2014. See my spreadsheet at aco.htm.

This is the first of two parts. The second part will be posted on Thursday, September 04, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.