Free Stock Investing Education

Dividend Investing Stocks (Archived)

ELS - Equity Lifestyle Properties, Inc.

Dividend investing is a popular strategy with investors seeking an income stream. Dividend investors can be placed into two broad categories.

  1. The growth approach - buy dividend paying stocks with emphasis on the company's ability to grow and increase its future dividend payments (to maximize the future yield).
  2. The yield approach - buy dividend paying stocks at cheap prices (to maximize the current yield).

Dividend investors using the growth approach tend to look for the same basic growth characteristics as found with growth investing, but the stock must also pay a reasonably reliable dividend.

Dividend investors using the yield approach tend to be more concerned with the stock price and the companies ability and willingness to pay a regular dividend rather than its ability to expand.

Sometimes a company will satisfy the requirements for both approaches.

In the June 2015 issue a fundamental analysis is conducted on a selected sample of stocks. The analysis is based on fundamental data from one year ago. This allows financial students and investors to see how the stock price performed over the next 12 months after the hypothetical purchase.

Equity Lifestyle Properties, Inc.

Equity Lifestyle Properties, Inc. NYSE:ELS is a mid-cap REIT (real estate investment trust) and its stock trades around $14 million per day. ELS was founded in 1992 and has an established history of paying dividends and has a high dividend yield of around 3%.

The key fundamentals for ELS are shown below.

Growth fundamentals for ELS

YearIncomeEPS ROEDividendBook ValueEmployees
20043500.17 13%0.031.401000
2005410-0.10 -7%0.071.401500
20064100.69 35%0.192.001400
20074401.30 45%0.332.901600
20084200.73 23%0.433.103000
20095001.10 16%0.587.203200
20105101.24 17%0.647.303600
20115800.90 5%0.7817.703500
20127101.66 8%0.9120.603600
20137101.29 12%1.0810.703700

The fundamental data above shows that ELS has broadly increased its revenue, earnings, book value and employees over the last decade. These are the characteristics of a growth stock. The dividends have consistently increased over the last decade and the stock provides a yield of around 3%. Thus ELS is a growing company stock that also provides a high dividend yield.

Fundamental Analysis for ELS:

The return on equity varies considerably and is presently around 10% but has been as high as 45%. The profit margin (profit to income ratio) also varies somewhat but has increased in recent years to 15%.

The debt-asset ratio (total liabilities to tangible assets) has reduced in recent years and is now around 70% which means that ELS still carries a fair amount of long-term debt. Intangible assets and goodwill are not included in the ratio calculation. The tangible assets are used for the ratio calculation because these are hard physical assets that can be sold off in the event of bankruptcy liquidation whereas intangibles and goodwill cannot be sold.

The earnings growth for the 2014 fiscal year is projected to grow at 6% (based on the five year earnings growth trend). The revenue is projected to grow at 8% (based on the five year revenue growth trend).

The forward PE ratio is around 29 (calculated from the five year earnings growth trend rather than from forecast earnings). The Forward PEG is around 5.1.

The current business valuation is around $12 (with a 2.5% ten year Treasury bond yield).

ELSs book value is around $10 and if ELS does run into financial problems in the future this gives an idea of how far the stock price could drop.

The sample analysis uses data that is one year old. The hypothetical purchase date for the stock is 19-May-2014 and this allows the reader to see how the stock performed over the next year.

ELS had its 2014/03 quarterly results released prior to 19-May-2014 and this information is available for the analysis. The 2014 Q1 earnings showed a decline of 40% over the same quarter from a year ago (2013 Q1). The 2014-Q1 dividend is $0.325 for the quarter which is a 30% increase over the same quarter from a year ago (2014 Q1).

Overall the fundamentals are good with this mid-cap stock which has a reliable history of paying a regular dividend. Additional information such as consensus forecast earnings, broker recommendations and insider transactions are not considered for this sample analysis. A hypothetical position taken in ELS on the 19-May-2014 would give a purchase price of around $43.

The stock price performance is shown below in Chart 2. along with the annual earnings year to year growth. The stock chart is adjusted for splits and dividends.

Chart 2. Stock chart with earnings for ELS

weekly Chart ELS

As shown in Chart 2. above, ELSs gained around 25% over the next year including dividends. ELSs 2014 annual earnings increased by 9% over the 2013 fiscal year. ELSs 2014 dividends were $1.35 which is a 25% increase over the 2013 fiscal year.

StockInvesting.today

Stock Analysis for Finance Students and Investors