On Dec 1, Enbridge paid a dividend. I hold this stock in 2 accounts. The small position is directly with the transfer agent. I have a full drip on which allows for partial shares. So I averaged in with the recent dividend payment. Investing with the transfer agent, there are specific rules to follow for each company. The last time I bought shares, the rules say to have the money in by the 15th of the month prior to the month they pay the dividend. When the shares are actually purchased, it will be at the end of the month, these new shares are not eligible for the dividend as the shares are purchased after the ex-dividend date. The other account that I own 33 shares of Enbridge is a TFSA account, so the dividends are tax free.
I purchased 200 units of Boston Pizza Royalties Income Fund at $21.23 per share in my margin account on December 8. Boston Pizza Royalties Income Fund works as follows.
"A key feature of the Fund is that it is a “top line” structure, in which BPI pays the Fund a royalty equal to 4% of Franchise Sales from restaurants in the Fund’s royalty pool. Accordingly, Fund unitholders are not directly exposed to changes in the operating costs or profitability of BPI or of individual Boston Pizza restaurants. Given this structure, and that the Fund has no current mandate to retain capital for other purposes, it is expected that the Fund will maintain a Payout Ratio close to 100% over time as the trustees of the Fund continue to distribute all available cash in order to maximize returns to unitholders." - Earnings Release 11-07-14.
Please note that franchise Sales exclude revenue from the sales of liquor, beer, wine and approved national promotions and discounts.
Boston Pizza International is consists of casual dining restaurants that are operated by franchisees. The owners of Boston Pizza International are George Melville and Jim Treliving and they own 50% each. Jim Treliving is also a dragon on Dragon's Den since the show started. Dragon's Den is Canadian based. The United States version of Dragon's Den is Shark Tank.
On January 1 of each year, the new restaurants started during the previous year are added the the royalty pool. When you walk into the front doors of the restaurants, you can go through one of 2 doors. One door leads to the lounge, which is a sports bar, that has lots of big screen TVs and sometimes pool tables. The other door is the restaurant section. All the food of the restaurant section can also be ordered and eaten in the lounge part.
Right now the fund is buying back units in large amounts so has not been an increase in its distribution payment in a while.
I also own this fund in my Tax Free savings account since 2010. Their distribution was lowered in January 2011, as the Canadian tax laws were changed regarding income trusts. The fund decided to remain an income fund instead of converting to a corporation, so there profits are taxed with what is called the SIFT tax. SIFT stands for Specified Investment Flow-Through tax. The reduction in the distribution was approximately equal to the amount of tax they had to now pay. Boston Pizza Royalties Income Fund has raised their distribution since then.
A few highlights from the recent quarter are as follows:
- Franchise sales of restaurants in the royalty pool were 201.4 million in Q3 and 584.4 million YTD in 2014 compared to 191.5 million and 571.1 million in the same periods, respectively, in 2013
- Same store sales growth, SSSG, was 3.1 % in Q3 of 2014 and 0.5% YTD compared to 0.8% and 2.5% for the same periods, respectively, in 2013
- On a franchise sales basis, SSSG was 3.0% in Q3 of 2014 and 0.1% YTD, compared to 0.8% and 2.7% for the same period, respectively, in 2013.
With the only expenses of the royalty fund is adminstrative expenses to run the fund, the fund is able to pay out all of its profits or close to 100% of its profits. As the price of oil continues to drop, I feel confident in continuing to hold this position going forward.
This purchase adds $244.80 to my annual dividend income. I will add the recent purchase to my investment account tab above in early January.
Disclosure: Long BPF-UN
Photo Credit: www.bostonpizza.com