Diversified Royalty Corp.

DIV-T

TSE:DIV

3.30
0.04 (1.20%)
Bennett Environmental Inc. was a Canadian company based in Oakville, Ontario. It specialized in the recovering of soils contaminated with chlorinated hydrocarbons, including PCBs and PCPs, Dioxins and Furans.
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Analysis and Opinions about DIV-T

Signal
Opinion
Expert
COMMENT
COMMENT
January 12, 2017

Of the 3 royalty businesses, this is the one that he would gravitate to if he were going to invest. It has a nice dividend yield which attracts investors. The one issue with these companies is finding good investments that are going to yield and feed that 10% dividend. In the last year, they have been divesting assets, but they have Mr. Lube as well as another real estate asset, which are good assets. He is on the sidelines until he sees something that they actually do. There are better places to get dividend growth.

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Of the 3 royalty businesses, this is the one that he would gravitate to if he were going to invest. It has a nice dividend yield which attracts investors. The one issue with these companies is finding good investments that are going to yield and feed that 10% dividend. In the last year, they have been divesting assets, but they have Mr. Lube as well as another real estate asset, which are good assets. He is on the sidelines until he sees something that they actually do. There are better places to get dividend growth.

COMMENT
COMMENT
October 26, 2016

They want to reduce their share capital. Had made their transformational move into the royalty business when they bought Fran Works. Recently announced a two-part transaction where Cara was buying that, and were effectively getting paid back for the royalty they have. When they initially bought it, they issued shares to the man who sold them Fran Works, so they were bringing those shares back and cancelling them, meaning that their share count would drop. This company has 2 royalty streams, Mr. Lube and Sutton Real Estate. They have cash now and are looking for new royalties. The dividend is fairly secure.

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They want to reduce their share capital. Had made their transformational move into the royalty business when they bought Fran Works. Recently announced a two-part transaction where Cara was buying that, and were effectively getting paid back for the royalty they have. When they initially bought it, they issued shares to the man who sold them Fran Works, so they were bringing those shares back and cancelling them, meaning that their share count would drop. This company has 2 royalty streams, Mr. Lube and Sutton Real Estate. They have cash now and are looking for new royalties. The dividend is fairly secure.

COMMENT
COMMENT
October 7, 2016

He owns this because he thinks it is a misunderstood dividend paying company that offers a pretty healthy dividend yield. About a month ago, they had 3 royalty streams with exposure to Western Canada, a market that has been under enormous pressure. The company is selling off the restaurant business, which they got a pretty good price. They will now be hugely reliant on Mr. Lube, which has had positive same-store sales for 20 years. Because they are selling off their restaurant, their payout ratio is in excess of 100%, but with the cash they are getting, they could overspend a minimum of about 5 years. Thinks they will make another acquisition. Feels the current cash flow is sustainable.

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He owns this because he thinks it is a misunderstood dividend paying company that offers a pretty healthy dividend yield. About a month ago, they had 3 royalty streams with exposure to Western Canada, a market that has been under enormous pressure. The company is selling off the restaurant business, which they got a pretty good price. They will now be hugely reliant on Mr. Lube, which has had positive same-store sales for 20 years. Because they are selling off their restaurant, their payout ratio is in excess of 100%, but with the cash they are getting, they could overspend a minimum of about 5 years. Thinks they will make another acquisition. Feels the current cash flow is sustainable.

BUY
BUY
September 29, 2016

They just sold off an asset and got a huge amount of cash so their payout ratio, although over a 100 percent is okay. He feels the dividend is safe. He likes the management team. It has been a tough environment for them with assets in Alberta.

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They just sold off an asset and got a huge amount of cash so their payout ratio, although over a 100 percent is okay. He feels the dividend is safe. He likes the management team. It has been a tough environment for them with assets in Alberta.

PAST TOP PICK
PAST TOP PICK
September 9, 2016

(A Top Pick Aug 12/15. Down 9.53%.) The trouble is that they have a royalty on a large group of restaurants in Western Canada, especially Alberta. Just sold their royalty stream to Cara Operations, so in a couple of months they are going to have $80 million in cash. He doesn’t think the dividend is in trouble, and has bought some more. Thinks the stock is going to do well.

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(A Top Pick Aug 12/15. Down 9.53%.) The trouble is that they have a royalty on a large group of restaurants in Western Canada, especially Alberta. Just sold their royalty stream to Cara Operations, so in a couple of months they are going to have $80 million in cash. He doesn’t think the dividend is in trouble, and has bought some more. Thinks the stock is going to do well.

COMMENT
COMMENT
August 30, 2016

A top 5 holding in his small-cap fund with a 9.2% yield. Payout ratio is around 100%, but they had to pay out $8 million due to a lawsuit. That is now over, so the next quarter will be the 1st quarter where you don’t have those embedded costs, which should bring the payout ratio down. You also get a hidden exposure to an improvement in the oil price, because part of their revenue comes from a restaurant chain in Alberta. At the same time there is an underpinning of real estate across the country and a royalty stream on Mr. Lube.

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A top 5 holding in his small-cap fund with a 9.2% yield. Payout ratio is around 100%, but they had to pay out $8 million due to a lawsuit. That is now over, so the next quarter will be the 1st quarter where you don’t have those embedded costs, which should bring the payout ratio down. You also get a hidden exposure to an improvement in the oil price, because part of their revenue comes from a restaurant chain in Alberta. At the same time there is an underpinning of real estate across the country and a royalty stream on Mr. Lube.

COMMENT
COMMENT
August 26, 2016

It seems things are getting close to being finalized with the Bennett litigation. That will mean the company will no longer have to pay for Mr. Bennett’s legal bills. The company just released a pretty decent quarter. However, their payout ratio came out to less than 100%, and the stock price actually started to move up off of that. It looks like the Alberta economy is going to start to pick up, which will mean a bottoming in the Franworks Restaurant, and you could see same-store sale improvements. It looks like the dividend is sustainable at these levels. If you are a longer-term investor and can wait for Franworks to turn itself around, you will then get a nice yield and probably some capital appreciation. When that happens, management is probably scouting out for the next deal as they want to make this a multi-royalty company.

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It seems things are getting close to being finalized with the Bennett litigation. That will mean the company will no longer have to pay for Mr. Bennett’s legal bills. The company just released a pretty decent quarter. However, their payout ratio came out to less than 100%, and the stock price actually started to move up off of that. It looks like the Alberta economy is going to start to pick up, which will mean a bottoming in the Franworks Restaurant, and you could see same-store sale improvements. It looks like the dividend is sustainable at these levels. If you are a longer-term investor and can wait for Franworks to turn itself around, you will then get a nice yield and probably some capital appreciation. When that happens, management is probably scouting out for the next deal as they want to make this a multi-royalty company.

HOLD
HOLD
August 23, 2016

(Market Call Minute.) Very interesting business. Mr. Lube has got 4% same-store sales growth pretty consistently, but given the business structure, he is on the sidelines.

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(Market Call Minute.) Very interesting business. Mr. Lube has got 4% same-store sales growth pretty consistently, but given the business structure, he is on the sidelines.

COMMENT
COMMENT
July 27, 2016

The market is obviously a little concerned about the dividend which is fairly high. However, overall he feels it is going to be fairly safe, because the CEO built this company to be a royalty stream company, and as a result knows that that dividend has to be sacred, so will do what he can to keep it and maintain it. There is some cyclicality to the business, especially in the Fran Works, a restaurant business mostly out in Alberta. The CEO is always working on new royalty streams. He wouldn’t be surprised to see him come up with something brand-new.

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The market is obviously a little concerned about the dividend which is fairly high. However, overall he feels it is going to be fairly safe, because the CEO built this company to be a royalty stream company, and as a result knows that that dividend has to be sacred, so will do what he can to keep it and maintain it. There is some cyclicality to the business, especially in the Fran Works, a restaurant business mostly out in Alberta. The CEO is always working on new royalty streams. He wouldn’t be surprised to see him come up with something brand-new.

COMMENT
COMMENT
July 20, 2016

There is worry about their 10% dividend, but he is not worried about it being cut at this time. Likes management. This has been in a tough position, as some of their restaurants were in Alberta. Mr. Lube, which they own, has been doing very well. Also, have royalties on Sutton, a real estate play. He still likes this.

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There is worry about their 10% dividend, but he is not worried about it being cut at this time. Likes management. This has been in a tough position, as some of their restaurants were in Alberta. Mr. Lube, which they own, has been doing very well. Also, have royalties on Sutton, a real estate play. He still likes this.

COMMENT
COMMENT
June 20, 2016

Very impressed with management. They have some good businesses and are just getting underway to build this business up. Expects them to do a couple of deals a year. Hasn’t bought this yet, but is following it very closely. The dividend might be in question if they have to keep paying legal fees.

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Very impressed with management. They have some good businesses and are just getting underway to build this business up. Expects them to do a couple of deals a year. Hasn’t bought this yet, but is following it very closely. The dividend might be in question if they have to keep paying legal fees.

COMMENT
COMMENT
June 10, 2016

Looked at this when it first came out, and was thinking about it as a Short. The main concern was their initial investment in Western Canada was essentially casual dining. When you look at the experience of others in the last downturn in 2008-2009, it had a big impact, particularly in Alberta. They have since diversified with 2 other investments including Mr. Lube and a realty company. He likes those 2 additions, but it has been dragged down by the casual dining business. Ultimately they are going to diversify into more than just 3 investments, so for the time being he is happy to stay on the sidelines. 9.8% dividend yield.

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Looked at this when it first came out, and was thinking about it as a Short. The main concern was their initial investment in Western Canada was essentially casual dining. When you look at the experience of others in the last downturn in 2008-2009, it had a big impact, particularly in Alberta. They have since diversified with 2 other investments including Mr. Lube and a realty company. He likes those 2 additions, but it has been dragged down by the casual dining business. Ultimately they are going to diversify into more than just 3 investments, so for the time being he is happy to stay on the sidelines. 9.8% dividend yield.

BUY
BUY
May 31, 2016

(Market Call Minute.) Alberta is getting better and there is a good yield on the stock.

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(Market Call Minute.) Alberta is getting better and there is a good yield on the stock.

COMMENT
COMMENT
May 27, 2016

(Market Call Minute.) This sold off after a weak Q1 due to weak restaurant sales in Western Alberta. Believes their dividend is more sustainable than the street believes. Has been nibbling on this in its weakness. Just under 10% dividend yield, which he feels is sustainable.

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(Market Call Minute.) This sold off after a weak Q1 due to weak restaurant sales in Western Alberta. Believes their dividend is more sustainable than the street believes. Has been nibbling on this in its weakness. Just under 10% dividend yield, which he feels is sustainable.

COMMENT
COMMENT
May 24, 2016

A pretty good company, based in Calgary. They are trying to acquire different assets which they can generate free cash flow from in order to pay high dividend yields. Currently it is a very high payout ratio. He is a bit concerned about their latest acquisition which they have potentially overpaid for. Over the long-term, the management team is very smart and really know what they are doing, and will build a good business and continue paying a high dividend yield.

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A pretty good company, based in Calgary. They are trying to acquire different assets which they can generate free cash flow from in order to pay high dividend yields. Currently it is a very high payout ratio. He is a bit concerned about their latest acquisition which they have potentially overpaid for. Over the long-term, the management team is very smart and really know what they are doing, and will build a good business and continue paying a high dividend yield.

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