RYM - Ryman Healthcare

[ajs]

2013 to 2016 was a dud wasn't it mate, like a couple of blokes on here predicted I gave a nice big clear Beagle bark or two when it was $14 too but most chose to ignore that and thought I was a dumb dog.

Interestingly, no way would Winner have seen my post directly above his due to the time stamp and time taken to type up his post above and I can confirm to others we have not been comparing notes in recent weeks on this. We both felt three years or so ago that RYM would go nowhere for three years and both feel there's at least one more year of that to come. We've been right so far, lets see how we go for this coming year. Disc Hold SUM other much faster growing company of a current year underlying PE of only 14.2.

Same couple of guys that predicted this back in 2017
Ryman share price at the time $8.82 13 mths later $14.09

Just trying to bring some balance to the tea leaf reading

[Beagle]

You will always get periods of over exuberance. Fundamentally I have been saying for years now that there are better opportunities in this sector and over that period of time that I have made that call, RYM has underperformed. I still see it as very fully priced but who knows they might pull a rabbit out of the hat with their interim result...but I don't think so...real estate in Melbourne is not pretty. #3498 says it all as to how I see it, happy to leave it there and leave holders in peace.

[Arbroath]

Repost of previous table

There have been times when buying RYM has resulted in below average terms - each time is when RYMs PE multiple was very high. Expected because generally fpr stocks and markets buy when valuations are stretched (above average) expectured future returns will be below average

There have been periods of poor returns from RYM over periods up to 5 years ...but as Vaygor will attest to to long term (>5 years) have been very good - but note sometimes trhat can be 15% pa nd sometimes 30% pa depending on the starting point and whether RYM's starting PE is low or high.

RYM's PE (underlying profit trailing) has averaged about 20 this century ranging from below 10 to the high 30s. Its that change in PE that drives the change in returns rather than that consistent earnings growth

Alot of wisdom there winner. I'm up 35% in 15 months in RYM ignoring the small dividends. It's all about entry points for future returns and the fact is RYM is the sector leader and it has a long history of consistent performance so derseves a premium to the others in the sector. How much of a premium is the question to be debated imho. Happy holding as in 10 years this will be a bigger company paying bigger dividends with a bigger share price (barring a Depression). I also own the mutt Arvida which has far better yield and one day might show some growth!

[Vaygor1]

... OCA for its higher ..... yield.....

.... I also own the mutt Arvida which has far better yield and one day might show some growth!

The thing is with OCA and ARV (amongst others) is by very virtue of the fact they pay a higher yield relative to RYM in the present, they then have less capital to recycle into growth. I know OCA and ARV can get capital using other methods than a reduced dividend, but these methods come with their additional carrying costs.

Because of the above, OCA's and ARV's growth will be more suppressed than would otherwise be the case. As the year's tick by, OCA and ARV's percent yield will in relative terms to a present-day purchase be surpassed by RYM.

RYM's growth will in addition provide a far superior Capital Gain in the medium to long term as a result.

It's a classic case, from a shareholder's perspective, of "Do I want a good return now?..... or a great return later?"

Using one of my better real-life examples:

Purchased a parcel of RYM in Nov-2008 at $1.38/share
Pre-tax dividend payments by Jun-2019 for this parcel since buying it will total $1.40/share
ie. Time for the share to completely pay for itself by way of pre-tax dividends is 11.5 years
Average dividend yield over this timeframe is 100/11.5 = 8.7% per annum.
.... and the average yield for this parcel from here-on-in will only increase.

The PE equals the theoretical number of years for a share to pay for itself via its own earnings with the assumption of no growth or shrink.

As the above example's actual and real average yield (expressed like a PE... i.e. a PD Ratio - Price Dividend Ratio is 11.5, then what does that make the actual and real PE (ie the number of years for the share to pay for itself by way of its own earnings) for this parcel?

I'll let the reader do the maths. Hint the answer will be significantly less than 11.5

I am under no illusion my method of analysing the above will spark some debate.... and that is fine.

[percy]

A great pity more people on this site do not look past the next 6 days/ months or so.
Great post yet again Vaygor1.

[forest]

Thats also the way I look at it Vaygor. And Percy is right, going by writings on this forum one would think we in the minority. Maybe we just do not post as often as others.

[Joshuatree]

The difference is that some are trading and some are investing. Traders pay more tax and promote the stocks they've just bought and promote the stocks they are selling, they have shorterm timeframes and often similar integrity.
Investors buy /hold/add, if the stock maintains its premium quality status and performance. Its the sitting that grows ones wealth in stocks like this.

[Arbroath]

Percy / Forest

With all due respect you have no idea what my timeframe is. I own Ryman and agree with Vaygor's analysis and logic.
Arvida is an entirely different stock - more focussed on care than developement and pays a higher yield.
People often have different objectives with different investments like Argosy for relatively safe high yield versus Tourism Holdings for growth.
Just because someone owns something different to you or has a different time frame doesn't mean you need to be so judgy...

[Patient Panda]

The thing is with OCA and ARV (amongst others) is by very virtue of the fact they pay a higher yield relative to RYM in the present, they then have less capital to recycle into growth. I know OCA and ARV can get capital using other methods than a reduced dividend, but these methods come with their additional carrying costs.

Because of the above, OCA's and ARV's growth will be more suppressed than would otherwise be the case. As the year's tick by, OCA and ARV's percent yield will in relative terms to a present-day purchase be surpassed by RYM.

RYM's growth will in addition provide a far superior Capital Gain in the medium to long term as a result.

It's a classic case, from a shareholder's perspective, of "Do I want a good return now?..... or a great return later?"

Using one of my better real-life examples:

Purchased a parcel of RYM in Nov-2008 at $1.38/share
Pre-tax dividend payments by Jun-2019 for this parcel since buying it will total $1.40/share
ie. Time for the share to completely pay for itself by way of pre-tax dividends is 11.5 years
Average dividend yield over this timeframe is 100/11.5 = 8.7% per annum.
.... and the average yield for this parcel from here-on-in will only increase.

The PE equals the theoretical number of years for a share to pay for itself via its own earnings with the assumption of no growth or shrink.

As the above example's actual and real average yield (expressed like a PE... i.e. a PD Ratio - Price Dividend Ratio is 11.5, then what does that make the actual and real PE (ie the number of years for the share to pay for itself by way of its own earnings) for this parcel?

I'll let the reader do the maths. Hint the answer will be significantly less than 11.5

I am under no illusion my method of analysing the above will spark some debate.... and that is fine.

i do love your posts Vaygor.

Theres a reason RYM is more than 60% of my listed holdings

[Maverick]

Great write up Vaygor and well done you, I hope you held loads and now have a new boat. An excellent demonstration that hanging in with a good company is a winning strategy. Think RBD once $.59 cents, THL once $0.42 cents , Trademe, AIA and of course your RYM and SUM.

You clearly articulate how RYM have held back cash profits for growth and that has fueled compounding returns for you. The logic I see for OCA and ARV giving out half of their profits is to satisfy dividend investors (for old guys) while retaining some cash for their companies growth ambitions(for young guys).

As a huge fan of dividend stocks myself (it makes them easy to hold while the share price drops) I reckon I get the same compound effect buy simply reinvesting the dividends back into the same stock.

I`m not interested in doing any spreadsheets on it but my gut tells me the 2 methods to achieve the compounding growth from both styles are going to be reasonably similar. Particularly in the retirement sector with the "right to occupy" system creating loads of cash flow for growth.

And to restate, having a 4-5 % return allows me a solid sleep when there is plenty talk of bear markets et al.