One Guy's Investments: Annual Checkup -- RYN

Makes sense to take a closer look at Rayonier (RYN -- free RT quote) today, since they just released some news that got a little attention and gave the shares a little haircut. Rayonier is a big timber and fiber company that owns big swaths of land primarily in the Southeast US and in New Zealand. It's also structured as a REIT, much like Plum Creek, the other big US Timber play, and the current dividend is about 4.5%. It's also instructive to note, though it doesn't affect my tax-deferred holdings, that this dividend generally comes through as a long term capital gain for tax purposes, not taxable income as with most REIT dividends. I wrote tongue in cheek about Rayonier's silly little 3-2 split a few months ago, but everything I wrote about Rayonier when I covered them in more detail in the Summer still holds true -- it's just that the price has increased pretty significantly since I opened my position in March at a split-adjusted $28.67. So has it gone up too fast, especially considering today's news that they're shaving a few cents off their 05 guidance two weeks before earnings come out? I don't think so. The reduced guidance was just because RYN decided to develop some residential and commercial real estate on its own instead of selling the land, which is probably good for better long term earnings, and Rayonier is a long term core holding for me that nicely diversifies my portfolio. I plan to keep it and watch the dividends pile up over a long, long time -- timber has historically provided stock-like gains with bond-like volatility, and RYN gives me that as well as two kickers to ratchet up returns: HBU and fiber. Rayonier sells timberland that has a "higher and better use" (HBU), most of which is in the coastal areas of northern Florida and southern Georgia, and their fiber business continues to experience high demand as their high-tech fibers expand from diapers into all kinds of other surprising areas. Not much to dislike in the long term, though as it's already a sizable part of my portfolio (third biggest holding after GOOG and BRKB) I am not interested in investing more in RYN at this point even if the price seems reasonable.

Labels: RYN