Assessing the Dividend Sustainability and Growth of SIR Royalty Income Fund (SIRZF, Financial)
SIR Royalty Income Fund(SIRZF) recently announced a dividend of $0.1 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into SIR Royalty Income Funds dividend performance and assess its sustainability.
What Does SIR Royalty Income Fund Do?
SIR Royalty Income Fund (The fund) holds an investment in SIR (Service Inspired Restaurant) Corp. The company is a privately held corporation that owns and operates a diverse portfolio of restaurants in Canada. It has concept restaurant brands, including Jack Astor's Bar and Grill, Scaddabush Italian Kitchen & Bar; and SIR's signature restaurant brands, including Reds Wine Tavern, Reds Midtown Tavern, Reds Square One, and The Loose Moose. The fund receives distribution income from its investment in the Partnership and interest income from the SIR Loan. It generates revenue through the license and royalty agreement from its investments in partnership.
A Glimpse at SIR Royalty Income Fund's Dividend History
SIR Royalty Income Fund has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down SIR Royalty Income Fund's Dividend Yield and Growth
As of today, SIR Royalty Income Fund currently has a 12-month trailing dividend yield of 7.64% and a 12-month forward dividend yield of 7.63%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, SIR Royalty Income Fund's annual dividend growth rate was -3.70%. Extended to a five-year horizon, this rate decreased to -12.80% per year. And over the past decade, SIR Royalty Income Fund's annual dividends per share growth rate stands at -7.30%.
Based on SIR Royalty Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of SIR Royalty Income Fund stock as of today is approximately 3.85%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, SIR Royalty Income Fund's dividend payout ratio is 0.60.
SIR Royalty Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks SIR Royalty Income Fund's profitability 3 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. SIR Royalty Income Fund's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and SIR Royalty Income Fund's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. SIR Royalty Income Fund's revenue has increased by approximately 47.30% per year on average, a rate that outperforms than approximately 96.39% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, SIR Royalty Income Fund's earnings increased by approximately 49.20% per year on average, a rate that outperforms than approximately 88.79% of global competitors.
Next Steps
While SIR Royalty Income Fund offers an attractive dividend yield, the company's declining dividend growth rate, high payout ratio, and low profitability rank suggest potential risks for dividend sustainability. However, its strong revenue growth and earnings growth rate indicate robust financial health, which could support future dividend payments. Investors should carefully consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
