3 Top Royalty Stocks With Dividend Yields of up to 9%

When it comes to secured dividends, these three are top notch. Each offers exposure to royalties through franchising and ultra-high yields.

| More on:
dividends grow over time

Source: Getty Images

Investing in royalty companies can be a lucrative strategy for those looking for steady income streams and potential capital appreciation. Restaurant royalty companies offer a unique investment opportunity with stable and predictable income streams derived from the gross sales of franchised restaurants. This model reduces operational risks and provides attractive dividends to income-focused investors.

Today, let’s look at three top choices with dividends up to 9%!

Diversified Royalty

Diversified Royalty (TSX:DIV) has a strong track record of steady performance. Over the past five years, the stock has shown resilience, maintaining a stable dividend yield. The company’s diversified portfolio of royalties, including brands like Mr. Lube and Sutton, ensures a steady revenue stream, reducing the risk associated with single-brand dependency.

DIV stock recently announced robust second-quarter (Q2) 2024 earnings, highlighting a 12% increase in revenue compared to the same quarter last year. This growth was primarily driven by higher royalty income from their various brands.

The latest earnings release for Q2 2024 reported a net income of $6.5 million, a significant improvement from $5.8 million in Q2 2023. The company also declared a monthly dividend of $0.0185 per share, maintaining a consistent payout to shareholders. This stable and growing dividend makes DIV an attractive option for income-focused investors. Now, with a 9.2% dividend yield, it’s looking sweeter than ever.

Boston Pizza Royalties

Boston Pizza Royalties Income Fund (TSX:BPF.UN) has also been a consistent performer in the royalty space. Despite challenges during the pandemic, the company managed to sustain its dividend payments. Historically, BPF.UN has provided a reliable income stream with its monthly dividends, supported by a strong brand presence across Canada.

The dividend stock has been making headlines with its strategic initiatives to drive growth. The recent launch of new menu items and aggressive marketing campaigns have started to show positive impacts on sales. In their Q2 2024 earnings release, BPF.UN reported a total revenue of $9.2 million, up from $8.6 million in the previous quarter.

The net earnings for the quarter were $5.4 million, reflecting the company’s efficient cost management and revenue growth strategies. The fund declared a monthly distribution of $0.065 per unit, showcasing its commitment to rewarding shareholders. Now, it holds a 8.17% dividend yield as well!

Keg Royalties

Finally, The Keg Royalties Income Fund (TSX:KEG.UN) has recently been in the news for its successful reopening of several locations post-pandemic, which has positively impacted their royalty income. The resurgence in dining-out trends has significantly benefited the fund.

Keg stock has a solid history of providing stable returns to investors. The fund’s performance is closely tied to the success of The Keg restaurants, which have a strong brand reputation and loyal customer base. Over the years, KEG.UN has maintained a high dividend yield, making it a favourite among income-seeking investors.

For Q2 2024, KEG.UN reported revenues of $7.8 million, up from $7.1 million in Q1 2024. The net income for the quarter stood at $4.2 million, indicating a strong recovery post-pandemic. The fund declared a monthly distribution of $0.0946 per unit, maintaining its attractive dividend yield at 7.98%

Conclusion

Investing in royalty companies like these offers a compelling mix of steady income and growth potential. Their strong historical performance, robust earnings, and consistent dividend payouts make them attractive options for investors looking to diversify their portfolios with reliable income streams. With recent positive news and solid earnings reports, these stocks are well-positioned to continue delivering value to shareholders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Consider Sienna Senior Living for a Stable Monthly Income

Buying this Canadian dividend stock could help you build a dependable monthly income portfolio for the long term.

Read more »

Female raising hands enjoying vacation, standing on background of blue cloudless sky.
Dividend Stocks

Best Beginner-Friendly Stocks to Buy Now in Canada

These top TSX stocks have delivered attractive long-term returns.

Read more »

customer uses bank ATM
Dividend Stocks

Here’s the Average TFSA and RRSP at Age 65 for Canadians

The TFSA and RRSP together make an ideal pairing for retirees, but is the average even enough?

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Should You Buy the 3 Highest-Paying Dividend Stocks in Canada?

A few dividend stocks saw a sharp correction in November, increasing their yields. Are they a buy for high dividends?

Read more »