Q: Hello 5i
One of the advantages a small investor may have is access to buying small companies where Institutional Investors would not be able to buy a meaningful position. Easy to say that Source Rock Royalties is a tiny company at $40 MM.
As they have been operating since 2013 (public since March 2022) with a successful dividend + Growth Model and never a negative cashflow quarter, would you consider this one a decent play for Royalty Income. The Dividend yield is high (9%) with low payout ratio (60%) and cash on the books ...... so it appears the business and income stream are sustainable.
With a quick review of their financials and business model, do you see anything that would be of concern for an investor looking to take up a position to enhance Portfolio income?
I did notice the prior two Q&A.
Thanks
One of the advantages a small investor may have is access to buying small companies where Institutional Investors would not be able to buy a meaningful position. Easy to say that Source Rock Royalties is a tiny company at $40 MM.
As they have been operating since 2013 (public since March 2022) with a successful dividend + Growth Model and never a negative cashflow quarter, would you consider this one a decent play for Royalty Income. The Dividend yield is high (9%) with low payout ratio (60%) and cash on the books ...... so it appears the business and income stream are sustainable.
With a quick review of their financials and business model, do you see anything that would be of concern for an investor looking to take up a position to enhance Portfolio income?
I did notice the prior two Q&A.
Thanks
5i Research Answer:
The share float is quite small with CNR owning 20.7% and insiders at 10%. That would be our main concern. The revenue base is quite small also, with $1.99M last quarter. Its dividend history is less than three years. But, other fundamentals look OK. Production is hitting records, and we think its asset mix is pretty good. We would rate management good as well. We would note shares are still (slightly) below their 2022 IPO price, which indicates how tough it can be to attract attention in micro-cap land. But for a 'basket' approach with several other stocks we would consider it an OK but high risk position.