Alaris Royalty Corp (AD.TO)

The kind of stock that you buy for the dividend. Its net trend has been kind of negative, and now looks to be consolidating. Chart shows there may be a triangle, which is a good consolidation. If it breaks out to the upside, that would be a very positive thing. If you break down, then you are still in that nasty downtrend. He sold his holdings about a year ago. Dividend yield of 7.6%.

When the earnings were growing nicely, the stock was rising and actually went up to 2X BV. However, since that time, nothing much has happened and the earnings have flatlined and the stock came down quite a bit. It actually fell down to its BV at about $19.50-$20. It has now had a nice bounce, because it has a nice yield too. If this fell back to $19-$21, he wouldn’t mind buying it.

A company he wants to like. It has a nice distribution, but they’ve run into issues with some investments they’ve made. The nature of this business is that they make concentrated investments, so that when one goes bad, it can really impact the results. Currently they have 2 that are having issues. Management’s forecast for 2017 seems to be a breakeven payout ratio. They have some cash, so doesn’t think there are going to be cuts, but it is tight. He would give it 6 months.

This became public about 10 years ago and has done extremely well over the long-term. They’ve had a few issues in the last couple of years, and the stock has struggled because of that. Dividend yield of 7.1%. (Analysts’ price target is $24.00.)

A good, solid company. But a number of investments they made recently are having to be restructured. The dividend is sustainable, with payout close to 90%.

This had a bit of a setback over the last couple of years, but we are finally beginning to see them work out of the problems they’ve had with their partner companies. A good stock for people who are looking for steady income. One of the fears was when a number of these companies were having trouble meeting their preferred payments. They’ve made a few new investments with some new companies and have started a small-cap division. They are finally getting back on track. Dividend yield of 7.25%.

An approximate 7% dividend yield, indicating there might be some risk. The most recent 4 quarters of cash flow was 76%. Historically that is high, but is also typically maintainable. Earnings is expected to be $1.50 this year, growing to $1.64. His ranking out of 720 stocks is 124, which is an acceptable risk.

The chart shows this had a little bounce off the bottom. There is overhead resistance, and you would like it to break out through that at around $24. Indicators are starting to turn up, which is pretty positive.

A royalty company that buys revenue streams from other companies by financing them. They’ve had some problems with a few of their streams. This is a Short for him. It has had a weak price momentum and the valuation just isn’t there. It needs a high-priced currency to be able to issue shares and pick up their revenue streams. Great yield of 8.1%. Valuation is getting better on a PE basis, but ROE is not there yet. It is expensive on a EV to EBITDA basis.

It broke down on a technical basis and he sold it. They had a couple of royalty companies that went sideways. Investors are in it for the yield. They are constantly looking for new acquisitions, but they have been dealing with all these ones that went sideways. Wait until they have things cleared up before buying.

He still likes this. They have interests in what they call partner companies, where they issued preferred stocks on which they hope to make about 15%, and tend to pay out about 6%. This is really a long-term dividend growth story, but they’ve really stumbled in the last 1-1.5 years with a number of their partner investments, and it has taken longer to straighten out than anyone anticipated. It gives a generous yield, and doesn’t think the dividend is in any danger, at least for the time being. Still thinks there is significant capital appreciation in the stock. They’ve also started a “small-cap” division and he expects to see growth from this area as well. Dividend yield of 8.2%.

Cut their dividend in 2009, but ever since then, they’ve raised it quite a bit. Now they have a couple of portfolio problems with their royalty stream. Doesn’t think the stock will do much until they accept the fact that some of their royalty payments are not being paid, and they have to somehow restructure to deal with the problem. Uncertainty is a killer of stock prices. The payout ratio is over 100%, so he would not say that the dividend is safe. Dividend yield of 8.1%.

A royalty company, and has investments in approximately 15 private companies, where it has a royalty or gets a preferred interest. Results can sometimes be lumpy. He is comfortable holding this.

(A Top Pick April 21/16. Down 29.47%.) A company that has done really well building a really well run business. Kind of a unique model. It is kind of like a royalty on non-resource companies. A great buying opportunity. Dividend yield of 8% which is sustainable. The stock is worth about $30.

Ranks in the top 5% of his database. Free cash flow yield is about 2.8%. The overall payment of 4th quarter trailing cash flow is around 72%. Historically, if it is more than 100% of cash flow, it is not sustainable. The outlook for earnings is slightly down for 2017, and a glacial rebound for 2018 at 7%. The dividend looks to be sustainable. Dividend yield of 7.3%.