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Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Viva Energy REIT (ASX:VVR) share price is 21% higher than it was a year ago, much better than the market return of around 5.1% (not including dividends) in the same period. So that should have shareholders smiling. Viva Energy REIT hasn't been listed for long, so it's still not clear if it is a long term winner.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over the last twelve months, Viva Energy REIT actually shrank its EPS by 4.4%. Sometimes companies will sacrifice EPS in the short term for longer term gains; and in that case we may be able to find other positives. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
We note that the most recent dividend payment is higher than the payment a year ago, so that may have assisted the share price. Income-seeking investors probably helped bid up the stock price. Though we must add that the revenue growth of 3.5% year on year would have helped paint a pretty picture.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
We know that Viva Energy REIT has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Viva Energy REIT stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Viva Energy REIT's TSR for the last year was 29%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Viva Energy REIT shareholders should be happy with the total gain of 29% over the last twelve months, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 7.5% in that time. This suggests the company is continuing to win over new investors. Keeping this in mind, a solid next step might be to take a look at Viva Energy REIT's dividend track record. This free interactive graph is a great place to start.
But note: Viva Energy REIT may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.