Q: Could I get your opinion on Freehold Royalties? Is the dividend safe?
Thank You
Thank You
5i Research Answer:
We would consider FRU a decent royalty company. Payout ratio is 66% and the balance sheet is decent Debt is barely 1X cash flow. There is cyclical risk here and the dividend has been cut in other cycles. But barring further declines in commodity prices, the dividend is probably secure for a while. The stock is reasonably cheap, for a royalty company and we think it is decently managed. We would be OK owning this for a sector investor looking primarily for income. The last quarter was good.