Diversified Royalty Corp (DIV.TO)

It screens well in his quantitative strategies. They had a big hiccup a year and a half ago with one of their restaurant royalties. Since then, they added an auto muffler and oil change service. It has grown quickly. The stock hasn’t done much but has built a big base at this level. He’s looking to buy more. He likes the interest-sensitive stocks now because he thinks the rate-hike cycle is almost done, especially in Canada. He thinks that a significant consumer slowdown has started, which will put a brake on rates. In the US, the Fed has been indicating too that it is slowing rate hikes. (Analysts’ price target is $4.13)

They have owned this for some time. It has holdings in Mr. Lube, Sutton Group and Airmiles. They hold a lot of cash and have a dividend over 6%. He would continue to hold this. Yield 6%.

He owns this one. He likes it, but is waiting for them to sign another deal. Management just bought back a bunch of their shares, which suggests to him they do not have an imminent deal just yet. He thinks they have a good pipeline for new deal opportunities. Yield 6.9%.

He has a small long position in it. They had problems with an investment they made a few years ago, but it has turned around, so there is some momentum to the earnings. (Analysts’ price target is 4$)

There was talk of them signing another royalty agreement by year-end, and he is not sure that’s going to come to fruition. Still likes the story and continues to have a half decent position in it.

It is an old pick of his. They buy royalties. They hit a speed bump a couple of years ago when they bought a royalty stream in Alberta when the economy there tanked. They now have a lot of promise. It has a nice little dividend. As they diversify their royalty stream it should get a higher multiple.

Hit a big speedbump a couple of years ago, when they bought a royalty on an Alberta centric restaurant chain. The CEO is one of the best he has ever met. He managed to sell that chain, and then sat on the cash. He just bought the Air Miles trademark and a variety of related royalties in Canada. That sent the stock sharply higher. Dividend yield of about 7%. This is a great business to own.

It has had a really big run here. It was falling and then they signed with Air Miles. Now their payout ratio is not above 100% like it was. They may sign another deal by year end and that would cover off their dividend. He likes the management team but he is not sure theres much more upward room left, unless they sign another deal. Some analysts are calling for $3.75-$4. There's strength and the fundamentals are looking good, but he thinks its more fairly priced now than it was a couple months ago.

It has done so well that he is not interested in it. He prefers companies that are out of favour. This has franchises, including Mr. Lube, Sutton Realty and Air Miles. Pays a great dividend, but has no idea how sustainable that is. Had a bit of a checkered past, so he is not as interested. If looking for a dividend player, and if this company can sustain their dividend, it could do very, very well going forward.

A royalty company. They pay out almost all cash in their dividends. They acquired a Western Canada restaurant chain, but sold it and are sitting on a lot of cash. Their dividend is not covered. It should be relatively soon that they make a replacement acquisition and then you should see the stock pop. The high yield is not risky because they have the cash balance to cover the yield. He thinks the management will do something intelligent.

A healthy dividend yield, but once you adjust for onetime items it is about a 100% payout ratio. Maybe they will grow into their dividend. The management has done an okay job to date. He prefers AD-T. Be careful until they fix the problems with their payout ratio.

(A Top Pick April 27/16. Up 27%.) He likes this company. They buy royalties and have done a good job. Had a misstep when they bought an interest in an Alberta restaurant, which hurt them a lot when the economy turned down. However, they got rid of that at a good price. They have lots of cash. Have a royalty on Mr. Lube and are looking around for more. A good CEO which has good deal-making abilities. Dividend yield of 8.4%.

Payout ratio is more than 100%, but they sold one of their Alberta assets. They are looking to redeploy that cash from that, but for now they’re going to pay a little bit more than their actual cash flow numbers. Their dividend is quite high at about 8.5%, so people are worried about that. If you break up this company, you could get close to $3.

Pretty steady right now because they sold one of their assets and have a lot of cash on the balance sheet. They are looking for other things to deploy their capital. They own Mr. Lube which has been consistently growing through the years, as well as Sutton Real Estate. Feels comfortable with this, and it is just a matter of what they are going to deploy their capital in. Has a nice yield of 8.7%.

A pretty solid company. They’ve had some missteps in the past when they made an acquisition and overpaid for it. They tried to establish a footprint, and as a result he thinks they overpaid. However, he feels that management is very solid and the dividend yield is sustainable, although it is a pretty high payout ratio. Expects that there will be more acquisitions from them, and over time, it will become a solid, dividend, profile stock. However, the risks are still elevated as to their payout ratio.