Diversified Royalty Corporation

Today I added to my position in Diversified Royalty.  I’ve already written about this company multiple times, so I wont bore you with what they do, or why I like this company so much.   You can read my previous posts about Diversified Royalty HERE and HERE

Today I picked up 356 shares for 3.04 each in my TFSA account.  I’ve owned Diversified Royalty for a couple of years now, and the only concern I have had with the stock was the payout ratio. Those concerns were alleviated last week, when they announced a new royalty deal with “Nurse Next Door” that would push the payout ratio below 100%.  On top of that, they also announced a small dividend increase of 3.4% as well!  Lastly they also announced a new credit line available to them so they can seek out other royalty deals.

Lots of good news, the only downside was they announced this at end of day Friday, and by the time I got my order in, the stock already jumped over 5%.  Oh well, short term pain for long term gain.

I expect the stock to continue to climb back into the 3.50 range for the next little while, and once another deal is announced and/or a few earnings releases come out, assuming everything goes as planned the stock should continue to climb.  The royalty deals they have in place have all done relatively well (except Airmiles which has been sluggish/flatlining).

Mr. Lube has been a rock star providing strong growth each quarter, Sutton is continuing with slow and steady growth, and the royalty streams of both Mr Mikes & Nurse Next Door are poised to grow by 2% per year.

Dividend Yield & Stock Appreciation

Diversified Royalty currently offers a juicy dividend of 7.83% which will now be fully covered.  This purchase adds $79.03 to my yearly dividend income, although that will increase slightly once the dividend is increased.  I now own 905 shares of Diversified Royalty and will be dripping 5-6 shares per month depending on the stock price.