Yahoo Finance Time to Buy the “Royalty” Portfolio
How many stocks trade on the TSX with the word ?royalty? or ?royalties? in the corporate name?
I count 11, but there are probably more. However, I restricted my search to stocks with a market cap of $100 million or more. Of the 11, four are valued at more than $1 billion with the rest under $1 billion. PrairieSky Royalty Ltd. (TSX:PSK) is the biggest at $7.6 billion, and SIR Royalty Income Fund (TSX:SRV.UN) is the smallest at $125 million.
The one thing they all have in common is they pay a dividend of some description, which should get the attention of income investors coast to coast.
I call it the ?Royalty? Portfolio, but you can call it whatever you?d like. I just know that it has delivered an average one-year return of 18.7% over the last 12 months ? 5.1% dividend yield and 13.6% capital appreciation ? which is 730 basis points better the TSX Composite Index.
Royalty Portfolio one-year performance
Company | Yield | One-Year Return | Company | Yield | One-Year Return |
PrairieSky | 2.4% | 13.9% | Pizza Pizza Royalty Corp. (TSX:PZA) | 5.0% | 16.8% |
Freehold Royalties Ltd. (TSX:FRU) | 4.1% | 16.5% | Boston Pizza Royalties Income Fund (TSX:BPF.UN) | 6.3% | 8.1% |
Osisko Gold Royalties Ltd. (TSX:OR)(NYSE:OR) | 1.2% | 22.9% | Diversified Royalty Corp. (TSX:DIV) | 6.9% | 40.7% |
Labrador Iron Ore Royalty Corporation (TSX:LIF) | 4.9% | 66.5% | Keg Royalties Income Fund (TSX:KEG.UN) | 5.4% | 1.2% |
Alaris Royalty Corp. (TSX:AD) | 7.9% | 1.0% | SIR Royalty | 7.7% | 13.0% |
A&W Revenue Royalties Income Fund (TSX:AW.UN) | 4.6% | 4.9% | Average | 5.1% | 18.7% |
Source: Morningstar.ca
There are several companies in the royalty portfolio that I have specifically written about over the past year and I continue to like going forward.
Alaris Royalty
Alaris Royalty continues to be one of the most vexing stocks on the TSX. Yielding an impressive 7.9% at the moment, it sprung a leak starting in July 2016 when it announced it was experiencing payment problems from some of its partner companies that would shrink the amount of investment income the company would receive in the months ahead.
While it?s worked through most of these problems, its stock has lost about one-third of its value since July a year ago. While I?m confident it will rebound, my September article expressed frustration with the slow pace.
Diversified Royalty
Over at Diversified Royalty, a much smaller company that makes money through royalties on the trademarks it owns on Air Miles, Sutton Realty, and Mr. Lube, I recommended its stock in December 2016, calling it one of three small caps to hold in 2017. Up 31% year to date, it?s been a real winner.
Unfortunately, the other two stocks in that article have gotten whacked in a big way and might not recover from 2017?s losses.
Pizza Pizza Royalty
Last October, I?d suggested that the pizza industry in North America was undergoing consolidation and wondered if Pizza Pizza, the operator, was a buyer or seller and if the royalty business?s stock would benefit from the M&A action.
So far, nothing has materialized, but Pizza Pizza Royalty?s 16.8% total return over the past year is a nice reward for patient investors waiting for the inevitable. I can?t tell you what?s ahead for 2018, but what I can say is that PZA will continue to deliver above-average capital appreciation on top of its tasty 5% yield.
You have to love the Royalty Portfolio. I know I do.
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Fool contributor Will Ashworth has no position in any stocks mentioned. A&W Revenue Royalties Income Fund is a recommendation of Dividend Investor Canada.
1 Massive Dividend Stock to Buy Today (7.8% Yield!) - The Dividend Giveaway
The Motley Fool Canada's top dividend expert and lead adviser of Dividend Investor Canada, Bryan White, recently released a premium "buy report" on a dividend giant he thinks everyone should own. Not only that - but he's created a must-have, exclusive report that outlines all the alarming traits of dividend stocks that are about to blow up - and how you can avoid them.
For this limited time only, we're not only taking 57% off Dividend Investor Canada, but we're offering you special access to two brand-new reports, free of charge upon signing up. They will outline everything you need to know so you steer clear of dividend burn-outs AND take advantage of the dividend giants in the Canadian market.
While this offer is still available, you can find out how to get a copy of these brand-new reports by simply clicking here.
Fool contributor Will Ashworth has no position in any stocks mentioned. A&W Revenue Royalties Income Fund is a recommendation of Dividend Investor Canada.
