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.
Jim: I agree with Seth’s question. RYN closed above $50, it looks to be at an all time high. Do we raise the target, or sell before May 6 earnings announcement?
So, now that the stock has almost reached your target price, and we are not even to May yet, are you going to raise again or go ahead and sell?
Saurin… are you asking about buying RYN? If so, make sure you understand the tax implications of buying a REIT. Their dividends or a portion of them can be treated differently than a “normal” dividend from say VZ.
RYN, PCL and PCH are 3 Paper/Forest REITs and RYN is the best of them. If you Google for ‘timber commodity’, you will see many favorable articles on the subject. So if you buy one of these REITs and you don’t to sell it before a correction because a BRIC falls on your head, don’t worry. A lot money will be waiting for you when you come out of coma.
jubakstudent
Try using “Wall Street Words” by David Scott.
Ex-dividend date: “The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. The length of time ensuing between the ex-dividend date and the date of actual payment may be up to a month.”
record date: “The date on which a firm’s books are closed during the process of identifying the owners of a certain class of securities for purposes of transmitting dividends, interest, proxies, financial reports, and other documents to them. For example, only the common stockholders who are listed on the record date will receive the dividends that are to be mailed on the payment date.”
The implications of this should be self explanatory. Feel free to ask any investment questions you would like on this blog. Good luck with your investments.
Thanks a lot Coach Jim for making it easy for beginners like me.
Please mention what is the ex dividend date, record date, etc for dividend portfolio.
They are so confusing for me.
Would be nice if you could explain the implications of each ?
Sorry for the puerile queries but I am learning the ropes.
Thanks a lot.
Saurin,
I like it around $41 also. If it gets there I’ll buy, if not I’ll move on to something else that I think is more fairly priced.
Thx Run26.2.
So the next question to the experts here is should I buy? I know Ed you gave me a 101 on trading a few weeks back but I haven’t had a time to get to it yet. But will soon. Thanks in advance.
Saurin… “Citi unit Primerica files for up to $252 million IPO”
http://www.reuters.com/article/idUSTRE62G1WK20100317
Teva to acquire ratiopharm:
“Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) announced today that it has entered into a definitive agreement to acquire ratiopharm, Germany’s second largest generics producer and the sixth largest generic drug company worldwide, for an enterprise value of €3.625 billion. The transaction is subject to certain conditions including relevant regulatory approvals. On a pro forma basis, the combined company would have had 2009 revenues of $16.2 billion. Teva expects to complete the transaction by year-end 2010.”
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100318005621&newsLang=en
Can anybody please say anything about “Primerica”. I think it is going to go public anytime.
This guy likes Jim’s TEVA pick:
http://seekingalpha.com/article/194282-high-conviction-the-dominant-generic-drugmaker-will-widen-its-lead?source=hp_wc
I was watching the stock shoot up over the past day or two, and wondering what you would say when it hit that sell mark. Thanks for the update…
Although, I’m at 47% profit with it right now… I might just go ahead and cash out my winnings.
I knew it had to be a good stock when you placed it in ALL 3 of your portfolios! BTW, do you intend to ever reinstate the “Buy” status for any of your “50 Best” stocks? I own a couple of those, but it would be nice to know when you think is a “good time” to buy into some of the others. I know that is sort of market timing, but we can easily admit that there are certain price ranges that are “better” to buy than others.
RYN is a stock I’d like to buy, but not at $46. Call me when it gets closer to $41.
And a happy St. Patty’s Day to all o’ ye. And may a little green leprechaun put a pot o’ gold in each one of your portfolios. Just be sure to sell it before the price goes down to $860 again.
southof8:
Sorry for the typo. Of course, I meant “Europe”.
southof8:
Ryanair, not to be confused with Rayonier, is an Irish airline that provides low fare, short-haul service in Eurioe; it does not pay a dividend.
Happy St Patrick’s day to all!
very cute Jim; isn’t Ryonair an Irish company?
What better day to give an update.
Happy St. Patrick’s day everyone.
Jim, do you think now is a good time for an update on TEVA? They’re near/at your sell price, as well as bidding on that German company (I’d expect a share drop if they ‘win’ it).