Investing in royalty companies can be a lucrative strategy for those looking for steady income streams and potential capital appreciation. Restaurant royalty companies offer a unique investment opportunity with stable and predictable income streams derived from the gross sales of franchised restaurants. This model reduces operational risks and provides attractive dividends to income-focused investors.
Today, let's look at three top choices with dividends up to 9%!
Diversified Royalty
Diversified Royalty (TSX:DIV) has a strong track record of steady performance. Over the past five years, the stock has shown resilience, maintaining a stable dividend yield. The companyâs diversified portfolio of royalties, including brands like Mr. Lube and Sutton, ensures a steady revenue stream, reducing the risk associated with single-brand dependency.
DIV stock recently announced robust second-quarter (Q2) 2024 earnings, highlighting a 12% increase in revenue compared to the same quarter last year. This growth was primarily driven by higher royalty income from their various brands.
The latest earnings release for Q2 2024 reported a net income of $6.5 million, a significant improvement from $5.8 million in Q2 2023. The company also declared a monthly dividend of $0.0185 per share, maintaining a consistent payout to shareholders. This stable and growing dividend makes DIV an attractive option for income-focused investors. Now, with a 9.2% dividend yield, it's looking sweeter than ever.
Boston Pizza Royalties
Boston Pizza Royalties Income Fund (TSX:BPF.UN) has also been a consistent performer in the royalty space. Despite challenges during the pandemic, the company managed to sustain its dividend payments. Historically, BPF.UN has provided a reliable income stream with its monthly dividends, supported by a strong brand presence across Canada.
The dividend stock has been making headlines with its strategic initiatives to drive growth. The recent launch of new menu items and aggressive marketing campaigns have started to show positive impacts on sales. In their Q2 2024 earnings release, BPF.UN reported a total revenue of $9.2 million, up from $8.6 million in the previous quarter.
The net earnings for the quarter were $5.4 million, reflecting the company's efficient cost management and revenue growth strategies. The fund declared a monthly distribution of $0.065 per unit, showcasing its commitment to rewarding shareholders. Now, it holds a 8.17% dividend yield as well!
Keg Royalties
Finally, The Keg Royalties Income Fund (TSX:KEG.UN) has recently been in the news for its successful reopening of several locations post-pandemic, which has positively impacted their royalty income. The resurgence in dining-out trends has significantly benefited the fund.
Keg stock has a solid history of providing stable returns to investors. The fundâs performance is closely tied to the success of The Keg restaurants, which have a strong brand reputation and loyal customer base. Over the years, KEG.UN has maintained a high dividend yield, making it a favourite among income-seeking investors.
For Q2 2024, KEG.UN reported revenues of $7.8 million, up from $7.1 million in Q1 2024. The net income for the quarter stood at $4.2 million, indicating a strong recovery post-pandemic. The fund declared a monthly distribution of $0.0946 per unit, maintaining its attractive dividend yield at 7.98%
Conclusion
Investing in royalty companies like these offers a compelling mix of steady income and growth potential. Their strong historical performance, robust earnings, and consistent dividend payouts make them attractive options for investors looking to diversify their portfolios with reliable income streams. With recent positive news and solid earnings reports, these stocks are well-positioned to continue delivering value to shareholders.
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