Up to date on April 2nd, 2025 by Felix Martinez
The Keg Royalties Earnings Fund (KRIUF) has two interesting funding traits:
#1: It’s a high-yield inventory primarily based on its 8.4% dividend yield.Associated: Record of 5%+ yielding shares.#2: It pays dividends month-to-month as a substitute of quarterly.Associated: Record of month-to-month dividend shares
You’ll be able to obtain our full Excel spreadsheet of all 76 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink under:
The mix of a excessive dividend yield and a month-to-month dividend render The Keg Royalties Earnings Fund interesting to income-oriented traders.
However there’s extra to the corporate than simply these components. Hold studying this text to be taught extra about The Keg Royalties Earnings Fund.
Enterprise Overview
The Keg Royalties Earnings Fund is a limited-purpose fund that owns the Keg emblems and associated property bought from Keg Eating places Ltd (KRL). Keg Eating places has constructed a premier steakhouse model in Canada and a longtime presence in america.
The fund owns the rights to the model and has granted KRL an unique license to make use of the Keg Rights in change for a month-to-month royalty fee equal to 4% of the product sales of Keg eating places.
In return for including eating places to the fund’s royalty pool, KRL receives the fitting to accumulate items within the fund. KRL’s efficient possession of the fund has grown from 10.00% on the time of the IPO in 2002 to over 20% as of the tip of 2024. Therefore, the pursuits of the 2 entities are well-aligned.
The Keg Royalties Earnings Fund stands out as a “top-line” fund, with its income stemming predominantly from KRL’s restaurant gross sales and solely minor working and financing bills curbing its internet earnings. Moreover, the fund advantages from a secondary supply of earnings.
This distinctive construction shields the fund from the fluctuating earnings and bills related to truly working the eating places. Consequently, the fund enjoys safety from inflation and a comparatively predictable stream of royalties and curiosity, amongst different advantages.
Development Prospects
Just like different royalty funds of its kind that we have now analyzed, just like the Boston Pizza Royalty Earnings Fund and the A&W Income Royalties Earnings Fund, the fund’s development prospects and total efficiency hinge on simply two key components. The primary is the variety of franchised eating places in its royalty pool, whereas the second is the speed of development in same-restaurant gross sales.
For context, in the beginning 0f 2004, the fund had 86 Keg eating places in its royalty pool. By the tip of 2007 and 2013, this quantity had grown to 95 and 102, respectively. Since then, exercise within the royalty pool has been slightly stagnant. On the finish of 2020 and 2021, the fund had 106 eating places in its pool, whereas by the tip of 2023, it had added yet another to its rely of 105.
We count on only a few annual additions to the fund’s royalty pool, because it seems the model has reached peak scaling potential. Compared to the Boston Pizza and A&W Royalty Funds, which primarily give attention to fast-food manufacturers and supply extra important development potential, Keg’s high-end eating expertise is extra tailor-made to a smaller and extra specialised demographic, leading to a extra contained growth functionality.
Supply: Annual Report
Future worth will increase in step with inflation ought to slowly however steadily add to the fund’s royalty-eligible product sales generated by KRL. In fact, foot visitors within the firm’s eating places and/or restaurant openings and closings may additionally sway outcomes.
The Keg Royalties Earnings Fund reported a lower in royalty earnings and Royalty Pool Gross sales for the yr ended December 31, 2024, primarily on account of an additional week of gross sales in 2023. Fourth-quarter Royalty Pool Gross sales have been $188.2 million, down 7.1% from the prior yr, whereas full-year gross sales declined by 3.0% to $719.5 million. Royalty earnings dropped 7.1% in This autumn to $7.5 million and three.0% for the yr to $28.8 million. Regardless of this, distributable money elevated to $2.97 million in This autumn and $14.17 million for the yr, attributed to adjustments in non-cash working capital. The Fund maintained a robust monetary place with $2.07 million in money and a 94.2% payout ratio for the yr.
Wanting forward, financial uncertainty stays a problem on account of excessive rates of interest, inflation, and decreased shopper spending. The Keg Eating places Ltd. (KRL) continues to prioritize sustaining excessive meals high quality and repair requirements whereas managing value pressures. Regardless of a 1.8% decline in visitor counts, KRL outperformed the broader full-service restaurant sector. This autumn working revenue for company eating places rose to $12.9 million, and EBITDA grew to $10.4 million, reflecting robust value administration.
KRL’s strategic focus consists of operational effectivity, visitor retention, and model power, as mirrored in a 1.1% enhance in reward card gross sales. Forbes additionally ranked the corporate Canada’s greatest restaurant employer in 2025. KRL stays dedicated to delivering distinctive hospitality and sustaining its management within the premium steakhouse market.
Dividend Evaluation
Aligned with the fund’s goal to distribute all its earnings to unitholders, the payout ratio has persistently hovered across the 100% mark. In 2024, it stood at 59%, whereas in 2021, it was 121.5%. This was because of the fund’s determination to disburse further money that had been held again in 2020 because of the pandemic, which had resulted in a payout ratio of simply 85.9% on the time. Nonetheless, administration estimates that 99.78% of distributable money has been distributed since its inception.
Traders shouldn’t count on distribution will increase or “cuts,” however slightly count on that every yr’s complete distributions per unit will range primarily based on the underlying product sales of Keg-licensed eating places.
We see restricted distribution development prospects shifting ahead, in step with our rationale concerning the fund’s total development. Aside from larger pricing through the years, we will see the fund producing kind of stagnant earnings and thus paying out slightly stagnant distributions.
The present month-to-month distribution of C$0.09 interprets to an annualized charge of C$1.08 (or US$0.78), implying a yield of 8.4%. This yield is slightly substantial, but it surely additionally displays traders’ expectations for restricted dividend development prospects.
It’s value highlighting that the administration’s strategy seems to contain dividing the quarterly or yearly distributions into equal sums by forecasting the forthcoming money flows, thereby making a uniform distribution charge and making certain consistency in payouts month after month.
Remaining Ideas
The Keg Royalties Earnings Fund presents a hefty dividend yield, which makes it a compelling decide for income-oriented traders, together with the extremely enticing frequency of its month-to-month payouts.
Its frictionless income mannequin, which is instantly tied to the restaurant’s product sales in its royalty pool, presents safety from inflation and a reliable stream of earnings, no matter every particular person restaurant’s profitability.
Supplied that the Keg model doesn’t considerably change, we anticipate the corporate will proceed to generate a secure stream of month-to-month distributions by means of dependable royalty and curiosity earnings.
Nevertheless, in comparison with different trusts of this sort we have now analyzed, we anticipate that the scope for distribution development is comparatively restricted because of the paucity of latest restaurant openings and the attainable saturation of the model.
Consequently, traders ought to put together for the majority of their returns to return from the dividend. Taking this under consideration, we imagine the fund is not going to obtain annualized returns exceeding the mid-to-high single digits, which is in step with its present dividend yield.
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