On January 26 Rayonier (RYN) told income investors what they needed to hear: Even though 2009 had been a very tough year for timber and real estate sales the company, organized as a real estate investment trust (REIT) so it must pass most of its profits on to shareholders, had generated cash available for distribution of $230 million for the year. That was an increase from cash available for distribution of $213 million in 2008. And more than enough to cover the company’s $2 a share annual dividend.
Oh, yes, earnings. The Rayonier reported earnings in share of 42 cents for the fourth quarter (excluding gains from the alternative fuel mix tax credit). That was in line with Wall Street estimates. Revenues at $309.8 for the quarter were down 15% from the fourth quarter of 2008 but met Wall Street projections of $309.1 million.
The company’s three divisions certainly can’t be said to firing on all cylinders. (So, it’s a three-cylinder car.)
Timber sales fell in the fourth quarter to $34 million, down $19 million from 2008, as the company postponed the sales of high value timber until prices recovered. Sales of real estate plunged even further to $11 million. That was $37 million below sales in the fourth quarter of 2008. Here too the company postponed sales of its better land.
Only performance fibers, specialty wood-fiber products used in things like cigarette filters, showed growth in the quarter. Sales of $41 million were up $16 million from the fourth quarter of 2008.
Analysts project 2010 as a much better year for Rayonier. Standard & Poor’s projects that sales, which fell 7% in 2009, will increase by 5% to 7% in 2010. The Wall Street consensus calls for earnings per share to grow by 18.8% in 2010.
In one non-sales or earnings related bit of news, Standard & Poor’s confirmed its BBB debt rating for Rayonier but revised its outlook to positive from stable.
As of March 17, the stock paid a dividend of 4.42%.
Combining that yield and the stock’s earnings prospects for 2010 I get a new target price of $50 a share by December 2010 for Rayonier in my Jubak’s Picks portfolio. That’s up from my prior target of $46 by June. The company’s next earnings report is due on April 29. (The stock is also a member of my Dividend Income Portfolio.)
Full disclosure: I own shares of Rayonier in my personal portfolio.