The franchised restaurant model is an attractive one for dividend investors. A steady stream of cash flows from franchisee to owner, which gets paid back to investors in the form of very generous dividends.
Take Pizza Pizza Royalty Corp (TSX:PZA) as an example. The publicly traded entity is entitled to a certain amount of royalties paid back to the parent company without taking on its share of expenses. This translates into dependable and predictable dividends, with a current yield of 5.7%.
The company continues to post solid growth numbers, with same store sales increasing 2.5% and total sales up 3.3%. It has 736 total restaurants across Canada with most in Ontario and
Alberta, meaning the chain has plenty of opportunity to expand into other provinces.
Another great franchised restaurant stock is A&W Revenue Royalties Income Fund (TSX:AW.UN), which just reported cracking the $1-billion annual sales plateau. It is Canada’s second-largest burger chain, trailing only McDonald’s.
A&W is having great success with its better ingredients marketing campaign, with same-store sales up 5.4% year to date and total sales up 12.5%. These strong numbers have enabled the company to give shareholders a generous dividend increase, upping the monthly payout from $0.121 per share to $0.13. The stock currently yields 4.6%.
