Q: I am looking for income with some potential for capital appreciation. What are your thoughts on Freehold Royalties?
Thank you
Thank you
5i Research Answer:
We think FRU can work here. FRU operates as a royalty company that owns royalty interests in the oil, gas and potash properties. It is a much less capital intensive energy play as a result which makes it an attractive business that typically trades at a relatively higher valuation. It is still cheap at 9x forward earnings and we think it is a good dividend name that benefits from lower rates. Other names we do prefer are ENB, H, and X due to more stable business models.