Recent Purchase: Alaris Royalty (TSE: AD)
On November 9th, I purchased 60 shares of Alaris Royalty (TSE: AD) at $24.80, with a trading cost of $6.95 for a total investment of $1,494.95. My stake in AD has added $97.2 to my 12-month forward dividends, which now hovers around $1060, which comes to roughly $88 per month.
I figured with the way the market’s been working lately, it didn’t matter exactly what Alaris Royalty’s Q3 earnings results would be, but they’d probably negatively affect the stock price. Investors are so fickle. Considering this, I waited for earnings to come in and watched the share price plummet between 4% and 6% through the trading session. It was a ripe time to pick up some shares and so I did.
According to CIBC Investor’s Edge:
Alaris Royalty Corp. (Alaris) is a Canadian company that provides alternative financing to a range of private businesses in North America. The Company earns its revenues by providing capital to private businesses (Private Company Partner). Alaris provides long-term equity capital to companies for whom traditional private equity capital or debt is not typically available or attractive, namely, privately held companies whose owners want to retain long-term control of their businesses. The Company has around 12 Private Company Partners, such as LifeMark Health Limited Partnership, LMS Limited Partnership, End of the Roll Carpet & Vinyl, KMH Cardiology Limited Partnership, Solowave Design LP, Labstat International LP, Agility Health LLC, SCR Mining and Tunnelling L.P., Sequel Youth and Family Services LLC, S.M. Group International LP/Le Groupe S.M. International S.E.C., Kimco Holdings LLC and PF Growth Partners LLC.
At the time of purchase, Alaris Royalty had a yield of 6.50%. The company has a 5-year yield average of 5.39%. AD has increased their dividend 63.64% since going public and starting to pay a dividend in 2009, from $0.99 to $1.62. For the year of 2015, they have increased their dividend from $1.47 to $1.62, which is an increase of 10.2%.
Alaris Royalty has a 5-year average dividend growth rate of 12.72% and no 10-year growth rate considering the stock has only been available for 5 years. AD increased their dividend three times in the last twelve months for a total increase of 13% as well as its tenth consecutive dividend increase since April 2010.
The Corporation’s annualized payout ratio is at approximately 82% today without considering any revenue from KMH. The conclusion of the KMH strategic process will only improve that number which supports the continued strength and sustainability of the monthly dividend.
Alaris Royalty currently trades at a trailing PE of 13.8, while the 5-year average PE is 23.6. This trailing PE represents a 42% discount relative to the 5-year average. It’s also a 49% discount to the S&P/TSX Index’s PE of 27.0. Thomson Reuters Stock Report has a 12-month mean price target of $34.00, which s a 36.8% upside to it’s current price.One analyst has a Strong Buy rating on shares of AD, while the other eight analysts have a Buy rating.