May 25, 2022

KEG-U Keg Royalties Income Fund



The Keg (KEG) Steakhouse and Bar is fast becoming one of Canada’s premier food brands.  Many premier dividend investing sites have been recommending the Keg Royalties Income Fund for some time now.  The first location of the now widespread restaurant chain opened in Vancouver, British Columbia in 1971.  The Fund now collects Royalties from over 100 locations across Canada.  On all sales made at Keg (KEG) locations, a 4% royalty gets kicked into the fund and distributed to unitholders.  Like many of the major franchises in Canada these days, the Keg prefers the franchisee model because of the simplicity of the royalty system.  This money essentially becomes pure profit regardless of the operating expenses each location faces.  The Keg (KEG) began operating under this structure on May 31, 2002.  It is one of the faster-growing restaurant chains all over Canada.


The Keg Royalties Income Fund was pleased to announce that in 2011 gross sales increased by 4.3% for the year.  While some of this growth was fueled by the addition of new locations to the royalty pool, same store sales growth was up a solid 3.5% for the year.  Royalty income increased by $808,000 or 4.4%% from $18,422,000 in 2010 to $19,230,000 in 2011.  While the fund was held back in returning all of these increases to unitholders due to the change in the taxation of income trusts in Canada, they still seen enough growth to warrant the interest amongst dividend devotees.  Overall, the Keg Royalties Income Fund (KEG) remains in a great position with over $4 million cash on hand, and working capital balance of nearly $1 million.  David Aisenstat, the President and CEO of Keg Restaurants Ltd. Stated the following about 2011 reports, “The strength of The Keg brand and our continuing focus on providing consistently great guest experiences in our steakhouses and bars have combined to result in exceptionally strong sales for 2011. We are confident that going forward our growth will continue through both new locations and same store sales increases.”


Units of the fund recently closed at $14.55.  This is right up against the 52-week high of $14.86 and up from a low of $11.15 (for a Beta of 0.799).  The Keg Royalties Income Fund (KEG) has a fairly mid-sized (for the sector) market capitalization of  $164 million.  Even as the unit price presses up against a higher and higher valuation, its Price-to-Earnings ratio still remains a very attractive 11.08.  Its annual dividend of $0.96 gives it a yield of 6.6%.  All signs point to that dividend number growing as the royalty pool experiences growth from internal sales escalating, as well as the addition of new locations to the fund.  The Keg looks to have a solid competitive advantage in its market, and has made its name synonymous with the steakhouse concept from coast to coast across Canada.  Opening up a Keg (KEG) location guarantees potential customers a certain high level of food quality, and consequently gives the owner immediate positive exposure and reputation.  If you have a little stomach for risk, this might be an excellent dividend stock to get exposure to.




KEG-U Keg Royalties Income Fund Dividend Stock Graph:


KEG-U Keg Royalties Income Fund Trend Analysis:

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KEG-U Keg Royalties Income Fund Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
KEG-UKeg Royalties Income Fund/The13.227.26104.01Retail-Restaurants0.09975981.798583-6.220663