# Boston Pizza Royalties Income Fund (TSE:BPF.UN)



## Soils4Peace

Is BPF.UN going parabolic? What's up? It passed $18.00 today.


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## doctrine

Hard to say... has a 6.5% dividend yield now, but for the longest time it was 7.5-8%. Perhaps people don't want to sell it and its being bid up by some funds looking for income?


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## webber22

Putting things into perspective, in 2006 the stock was $20, in 2008 it went down to $6. A low volume stock like this can fluctuate greatly, I think it'll settle at a fair value 6% yield or $20


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## Kaitlyn

Been keeping a distant eye on this one. Seems like a good dividend income stock - as long as you are willing to hold it longer term. It's fluctuated... and the yield is nice...

*Edit:* It's an income fund but in fact there is no difference anymore, right? It's simply a stock that pays a dividend? And you can of course have a capital gain/loss


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## doctrine

Its an income fund but yes it pays eligible dividends now. Its a bit of a dividend growth stock as well - it's raised its distribution twice in the last year alone.


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## gibor365

I don't hold BPF.UN or KEG.UN, but if I'd buy, I'd prefer KEG. (for both : eat dinner and buy shares ). KEG has better yield, better payout and P/B and much better P/E


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## Eclectic12

Kaitlyn said:


> Been keeping a distant eye on this one. Seems like a good dividend income stock...
> 
> *Edit:* It's an income fund but in fact there is no difference anymore, right? It's simply a stock that pays a dividend? And you can of course have a capital gain/loss





doctrine said:


> Its an income fund but yes it pays eligible dividends now. Its a bit of a dividend growth stock as well - it's raised its distribution twice in the last year alone.


Yes it is an income fund. 

Yes there is a difference between an income fund versus a dividend paying stock.

No - it does not pay eligible dividends only, a small amount of Return of Capital (RoC) is also paid - will all the bookkeeping to adjust the Adjusted Cost Base (ACB) this requires. This link indicates the tax breakdown of distributions, including RoC:
http://www.bpincomefund.com/en/faq.aspx

Note that where the ACB falls to zero or negative, the RoC portion of the distribution has to be declared as a CG, on each tax return going forward. 
http://howtoinvestonline.blogspot.ca/2010/07/return-of-capital-separating-good-from.html

For this reason, some investors will only put an investment like this in a RRSP or TFSA so that there is no need for the bookkeeping. 


Another difference is that it pays a higher tax rate than a dividend stock company does - which is why the distribution payments dropped when the tax rate changed for non-REITs. Then too, most stocks pay 100% eligible dividends, 0% RoC so for the stock, there is no need to adjust the ACB with each payment.

In all cases, trust, REIT, stock - when the investment is sold there will be either a capital gain or loss.


It might be worth checking out the CMF taxation section, "How Investment Taxes Work". 

From personal experience, it's a pain in the butt to discover the tax treatment is different than expected and to have to re-calculate with limited info, over several years. 

Understanding the tax treatment and setting up the bookkeeping in advance is simple in comparison. 


Cheers


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## Kaitlyn

Eclectic12 said:


> Yes it is an income fund.
> 
> Yes there is a difference between an income fund versus a dividend paying stock.
> 
> No - it does not pay eligible dividends only, a small amount of Return of Capital (RoC) is also paid - will all the bookkeeping to adjust the Adjusted Cost Base (ACB) this requires. This link indicates the tax breakdown of distributions, including RoC:
> http://www.bpincomefund.com/en/faq.aspx
> 
> Note that where the ACB falls to zero or negative, the RoC portion of the distribution has to be declared as a CG, on each tax return going forward.
> http://howtoinvestonline.blogspot.ca/2010/07/return-of-capital-separating-good-from.html
> 
> For this reason, some investors will only put an investment like this in a RRSP or TFSA so that there is no need for the bookkeeping.
> 
> 
> Another difference is that it pays a higher tax rate than a dividend stock company does - which is why the distribution payments dropped when the tax rate changed for non-REITs. Then too, most stocks pay 100% eligible dividends, 0% RoC so for the stock, there is no need to adjust the ACB with each payment.
> 
> In all cases, trust, REIT, stock - when the investment is sold there will be either a capital gain or loss.
> 
> 
> It might be worth checking out the CMF taxation section, "How Investment Taxes Work".
> 
> From personal experience, it's a pain in the butt to discover the tax treatment is different than expected and to have to re-calculate with limited info, over several years.
> 
> Understanding the tax treatment and setting up the bookkeeping in advance is simple in comparison.
> 
> 
> Cheers


How do you know whether a dividend-paying stock is also a return on capital?


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## Eclectic12

Kaitlyn said:


> How do you know whether a dividend-paying stock is also a return on capital?


The easiest way I've found is to go to the company web site under the section marked something like "Investor" or "Investor Relations". 

If there's RoC, there's usually a section marked something like "Distribution Info" or "Tax Info" or similar. Links that are labeled "Distributions" are a safe bet there's RoC. Here's another example from RioCan, which is REIT.
http://investor.riocan.com/Investor-Relations/distribution-info/Distribution-History/default.aspx

Bear in mind that some mutual funds (MF) and ETFs also pay RoC. Here's an ETF example:
http://ca.ishares.com/product_info/fund/distributions/XIC.htm

*Edit:* Make sure you scroll down to the "Annual Distributions" table at the bottom.


For comparison, the link below is the TransCanada (TRP) investor section, which is a dividend paying stock. Note that it refers to "Dividends".
http://www.transcanada.com/dividends.html


Note that there are now two types of trusts - the REITs like RioCan that corporately pay the trust tax rate and non-qualifying trusts such as Boston Pizza which pay a higher tax rate. Something like 95% of trusts which are not a REIT, converted to a stock company by Jan 1st, 2011 to avoid the higher tax rates. There are a few that have stated they won't convert and fewer still who are using up their tax credits before converting in the future.


Cheers


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## doctrine

It looks like 1.34% of the distributions were ROC in 2011. The remaining was eligible, so while there is a minor bookkeeping requirement, it is a very good stock for taxable accounts.


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## Eclectic12

doctrine said:


> It looks like 1.34% of the distributions were ROC in 2011. The remaining was eligible, so while there is a minor bookkeeping requirement, it is a very good stock for taxable accounts.


True. 

To be clear, I personally don't think the bookkeeping for trusts is that difficult or that much work. It's a few extra minutes compared to the reconciliation and tracking I already do, either by choice or gov't requirement. The main reason I had difficulty originally was that by the time I was aware of it, the required info was difficult to find.

YMMV as other investors hate it, particularly waiting for the final announcement of the amounts. 


To each their own ....


Cheers


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## gibor365

So, who bought it?!


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## Eclectic12

gibor said:


> So, who bought it?!


I bought in July 2011 at $12.47, after a friend pointed it out. Interestingly enough, he took his profits at $14+ and is regretting it.


Cheers


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## doctrine

I bought at 14.30 and 16.30. Closed today at 18.01


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## Eder

I got in at $12.55. I was looking for $14 at the time, but it just wants to keep going. This one is on my trigger finger list.


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## PharmD

Bought at 13.69 and am looking to get out soon. It has almost felt like too much of a good thing.


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## londoncalling

I may have got to the party a little late with all the recent posts about looking to get out. I bought on mar 19th a mere 13 days ago @ 16.75. I bought it for a long term hold and see this as a potential dividend aristocrat. I was not expecting this stock to take off like it has the last couple weeks in fact I expected it to pull back the minute I bought  so I was ready to averaged down. I am still very early in my accumulation phase so I am torn when stocks perform very well after I buy my first tranche. Deep down I know and understand that 2 weeks of price action should be ignored for a long term hold but human nature is human nature(damn you evolution for taking so long to eliminate this trait!). I am getting better at dealing with this psychologically. Many would say I could be trading this up and down,with tight stops, but I am not ready to be a trader yet as I am still reading and playing with pretend money. It is also harder to trade when you can only check the market before and after it closes on most days. Perhaps I should set a stop loss on this one for a quick 5% return if it comes back down in the near term and rebuy later. I have yet to use stops with real $. I tried them in a virtual account and found that when my stop was hit the stock would be sold and then go back up. 

Eclectic- thanks for the links to ROC. I currently only have equities RRSP and TFSA but I hope eventually, I will be able to increase my taxable income through investing to ensure that I am doing my part to help pay down the deficit.  Regardless, it really helped me understand how ROC affects ACB. 

Cheers!


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## Dmoney

First bought in early 2010 just under $12.00, subsequently bought 600 for the TFSA at $13.63.

I own this and KEG.UN, and would only consider selling either in two cases:

Price appreciates to the point where the yield is sub 5%. (Can buy bank with more upside with similar yield, that could also be an option play if it falls to this yield).

If one is yielding ~2% more than the other, I'd sell and switch into the higher yielding one. I first bought KEG.UN when it was yielding ~2% more than BPF.UN, within a matter of weeks, it had narrowed the gap with a big price jump.

In my opinion, both are great income plays, as long as they yield ~3%+ more than the big banks and telecom guys.


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## gibor365

I was considerint buying KEG or BFP last week-week and half...was waiting for some pullback, but they run up too fast...
The question how to identify not expensive high-yielders with good potential return?


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## Dmoney

The most simple answer I would give is to use the dividend growth model when picking yield stocks.

If you're investing purely for income in the here and now, you might focus more on just the highest yielding stocks, but if you're looking for a growing income stream I think the growth model is better. 

Value = Next year's dividends/(required return - expected growth in dividend)

As an example - BPF:

Next year's dividend: $1.2348 (assume 5% growth)
Required return: 10% (assumes I want to see a minimum of 10% total return)
Dividend growth: 5% (example only and likely to be lower in reality)

X = $1.2348/(10%-5%)

X=$24.70

You'll notice that the $24.70 value implies a yield of 5% which is the same amount as (required return-dividend growth).

While simple, the model should work fairly well, but is extremely sensitive to your required return, and the dividend growth. If you feel very strongly that a company can achieve X% dividend growth annually, it should be a good indicator of what value you can assign a company, but that's a difficult metric to predict with any real accuracy.

In _theory_, anytime the stock is below its _"value"_ it's worth buying, but I'd look for a steep discount rather than just a few %.


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## webber22

It reported quarterly results today. Stock fell as low as 15.61, picked up more at around $16.


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## Eder

Boston Pizza Income fund wants to buy up & cancel up to 10% of it's float using borrowed money. I think it is a good idea by management.

http://www.theglobeandmail.com/glob...20120822&archive=ccnm&slug=201208220813677001


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## londoncalling

depending on unit price I can only see this as a good investment as the interest rate on their credit is much lower than the distribution rate. This move should easily bring them back to or under their mandated target payout ratio. :encouragement:


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## Dmoney

Gotta love it... buying back stock yielding over 6% with debt at 3%. 
Was very happy to see the new highs it hit.


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## liquidfinance

BNN Top pick. Just seen this from the Globe. 

http://m.theglobeandmail.com/globe-...er-karl-berger/article4495336/?service=mobile


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## Kaitlyn

*Boston Pizza Royalties Income Fund(TSE:BPF.UN)*

Quite the drop recently... anyone else picking this up? I'm tempted...


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## jamesbe

recently? You mean TODAY! I was in the green on this fund until today actually.


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## blin10

I always wondered why it's so popular and why so much hype there... so they have cheap pasta days, so what?


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## webber22

Now would be a good time to carry out the company's planned share buyback of 1,442,522 units, 9.9% of the Fund's issued shares. 
I picked up one tranche today since I sold some when they approached $20


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## liquidfinance

webber22 said:


> Now would be a good time to carry out the company's planned share buyback of 1,442,522 units, 9.9% of the Fund's issued shares.
> I picked up one tranche today since I sold some when they approached $20



I should have sold but just been holding on. Now the fear sets in so I will probably miss the opportunity to pick up more as they get cheaper.


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## zylon

*"Nobody goes there anymore. It's too crowded."* ~Yogi Berra


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## doctrine

I believe it may be down because they haven't started their buyback yet, or because same stores sales growth was not as high in the last quarter. Still holding here - their payout is still below 100% (their target is 100%)


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## liquidfinance

Boston Pizza keeps on giving 



> *Boston Pizza Royalties Income Fund Announces 4.1% Increase to Monthly Cash Distributions to Unitholders*
> February 2013 distribution increased to 10.2 cents from 9.8 cents
> VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 8, 2013) - Boston Pizza Royalties Income Fund (the "Fund") (TSX:BPF.UN) announced today a cash distribution to unitholders of 10.2 cents per unit for February 2013. This is an increase of 0.4 cents per unit from the previous monthly rate of 9.8 cents per unit or $1.176 per unit on an annualized basis to 10.2 cents per unit or $1.224 per unit on an annualized basis. Including the February 2013 distribution, which will be paid in March 2013, the Fund will have paid out 128 consecutive monthly distributions totalling $160.7 million or $12.98 per unit since the initial public offering in July 2002.
> "This increase of 4.1% marks the second time that monthly distributions to unitholders have been increased in the last year and the 16th time that the monthly rate has been increased since the inception of the Fund," said Mark Pacinda, President and CEO of Boston Pizza International. "We are very pleased that Boston Pizza's history of strong sales performance has resulted in higher monthly cash distributions to unitholders of Boston Pizza Royalties Income Fund."
> The distribution will be payable to unitholders of record at the close of business on March 21, 2013 and will be paid on March 29, 2013. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to unitholders.


http://www.marketwire.com/press-rel...hly-cash-distributions-tsx-bpf.un-1765943.htm


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## doctrine

Nice - the new yield is 5.9%. This is their 16th increase in distributions in 11 years.


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## BlackThursday

doctrine said:


> Nice - the new yield is 5.9%. This is their 16th increase in distributions in 11 years.


They cut their distribution at the beginning of 2011. They've yet to return their distribution to the pre-2011 rate.


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## Eclectic12

BlackThursday said:


> They cut their distribution at the beginning of 2011. They've yet to return their distribution to the pre-2011 rate.


As I recall, at the time there was a notice on their web site highlighting that this was not a distribution cut but the increased income taxes being paid due to staying in the SIFT structure post-conversion deadline but not qualifying as for the lower taxes that a REIT would qualify for.



> The vast majority are REITs, but a few business trusts remain and will presumably operate under the new rules. Some have merely reduced their distributions roughly in line with the taxes they'll have to pay beginning Saturday.


http://www.cbc.ca/news/business/story/2010/12/31/income-trust-deadline.html

Cheers


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## BlackThursday

Eclectic12 said:


> As I recall, at the time there was a notice on their web site highlighting that this was not a distribution cut but the increased income taxes being paid due to staying in the SIFT structure post-conversion deadline but not qualifying as for the lower taxes that a REIT would qualify for.
> 
> 
> http://www.cbc.ca/news/business/story/2010/12/31/income-trust-deadline.html
> 
> Cheers


...and the end result to the shareholder is a cut. Don't be fooled by silly political statements.


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## Eclectic12

BlackThursday said:


> ...and the end result to the shareholder is a cut. Don't be fooled by silly political statements.


Last time I checked my math - where income taxes go up and cash payments stay the same - reduced after-tax money is reality.

Now if the company claimed they had not option but to stay in the current structure - that would be a silly political statement.


Bottom line is that without Flaherty introducing the "Tax Fairness Plan" - the after tax distributions stay the same.


BTW - what your thoughts on the trusts that converted back to a corporation to reduce taxes *and* paid reduced dividends? 

Cheers


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## BlackThursday

Eclectic12 said:


> Last time I checked my math...


..the distribution was cut. 
I'm not disputing whatever rationale they provided when they cut the amount of money given to a shareholder.
I am saying they cut that money.
Please don't cloud the issue willfully or unconsciously.


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## doctrine

Yes, the absolute value of the distribution was cut. If you held this in an RRSP or TFSA, your absolute return went down.

However, if you held it in a taxable account, you did not experience an after-tax cut, as you received the dividend tax credit. 

The tax-advantaged distribution is now up to 10.2 cents a share, from a pre-2011 level of 11.5 cents a share. This is the third increase since then. Total return is 60% since the beginning of 2011. Fantastic all around. I'm a big fan of former income trusts.


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## Eder

My capital gain has been over 80%...who cares about the distribution cut...total return is all that counts.
Also the pizza tastes great so another reason to hold the stock (Peter Lynch told me that)


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## My Own Advisor

Geez, people eat there that much??? Never really liked the food. The yield, I could eventually like. Seems like a good one for the TFSA.


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## Dmoney

Bought at $12 and $13.60... annualized return of ~28% and 40% for those purchases. Total return of over 100% and over 50%.

Bought in knowing full well the tax burden would be shifted from the individual investor to the company... Technically, yes they did cut their distribution, reality is they are paying tax at the corporate (trust) level instead of flowing income through to the unitholder, so as someone else pointed out, owners are now eligible for dividend tax credit. Net effect is almost a wash unless held in a tax free/deferred account. 

Love the stock, is one of my first two stocks bought, so it holds that special place in my heart... and stomach.


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## BullAllTheWay

Eclectic12 said:


> Last time I checked my math - where income taxes go up and cash payments stay the same - reduced after-tax money is reality.
> 
> Now if the company claimed they had not option but to stay in the current structure - that would be a silly political statement.
> 
> 
> Bottom line is that without Flaherty introducing the "Tax Fairness Plan" - the after tax distributions stay the same.
> 
> 
> BTW - what your thoughts on the trusts that converted back to a corporation to reduce taxes *and* paid reduced dividends?
> 
> Cheers


You got it right.


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## Eclectic12

BlackThursday said:


> I'm not disputing whatever rationale they provided when they cut the amount of money given to a shareholder. I am saying they cut that money.
> 
> Please don't cloud the issue willfully or unconsciously.


You aren't? 

Then what did you mean by:


> Don't be fooled by silly political statements.


That comment implies that the cause is related to a change in their business instead of a change in tax rates.

Something more a long the lines of "sure it was taxes but the investor is paid less" would have resulted in a different comment.


Cheers


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## BullAllTheWay

Eclectic12 said:


> You aren't?
> 
> Then what did you mean by:
> 
> 
> That comment implies that the cause is related to a change in their business instead of a change in tax rates.
> 
> Something more a long the lines of "sure it was taxes but the investor is paid less" would have resulted in a different comment.
> 
> 
> Cheers


Absolutely right. I did not like that comment either, because I thought that it was completely wrong.
What happened with the distribution was, in no way, the fault of BPF's management. And like somebody wrote, if you consider the tax credit, actually we receive a better yield now than before the conversion to a corporation.


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## Eclectic12

BullAllTheWay said:


> Absolutely right. I did not like that comment either, because I thought that it was completely wrong.


Context is key, IMO. 

If it was simply a description of "there's less money received" - that that is correct. 
For better or worse, the way I read the comments, it seemed to be implying that this was an arbitrary decision that reflected the state of the business.




BullAllTheWay said:


> What happened with the distribution was, in no way, the fault of BPF's management. And like somebody wrote, if you consider the tax credit, actually we receive a better yield now than before the conversion to a corporation.


Fault - no, Result of their decision - yes. 
I wonder if the tax credit as well as the costs of conversion - factored into management's decision to remain in a SIFT structure?


Regardless - the tax credit part would make me think about whether it's worth holding this in an RRSP or TFSA where the credit is not available. However, as someone else pointed out - there's been a big capital gain so maybe it doesn't matter that much.


Cheers


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## BullAllTheWay

Eclectic12 said:


> Context is key, IMO.
> 
> If it was simply a description of "there's less money received" - that that is correct.
> For better or worse, the way I read the comments, it seemed to be implying that this was an arbitrary decision that reflected the state of the business.
> 
> 
> 
> 
> Fault - no, Result of their decision - yes.
> I wonder if the tax credit as well as the costs of conversion - factored into management's decision to remain in a SIFT structure?
> 
> 
> Regardless - the tax credit part would make me think about whether it's worth holding this in an RRSP or TFSA where the credit is not available. However, as someone else pointed out - there's been a big capital gain so maybe it doesn't matter that much.
> 
> 
> Cheers


The question is: what other choice did management have? Maintain the distribution? Clearly not very intelligent. You don't put the business at risk just to maintain a level of distribution no longer sustainable. The rules had changed and management acted accordingly. What's the problem here? Only the fools don't change their behaviour in the face of reality.


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## doctrine

Worst case scenario with this stock: If you bought BPF.UN at its height in 2006 at $20, practically the day before the announcement of the income trust taxes, and held those shares to today, you'd still have a return of some 35%+ over 7 years. And, if you did any DCA'ing or reinvested the distributions, you'd have a much larger gain.


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## Jungle

My Own Advisor said:


> Geez, people eat there that much??? Never really liked the food. The yield, I could eventually like. Seems like a good one for the TFSA.


+1. I thought meatball sandwhichs and dry pasta was nothing to special.


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## Eclectic12

BullAllTheWay said:


> The question is: what other choice did management have? Maintain the distribution? Clearly not very intelligent.


The choice for management was whether to stay in a SIFT structure and live with the increased taxes or convert to a regular corporation paying dividends that has less taxes.

By staying as-is, it made keeping the payouts the same likely a bad choice as they would have had to come up with more cash to make up for the additional taxes.

What's less clear is what the impact of converting to a corporation would have had. There would be conversion expenses plus maybe some ongoing additional expenses but less taxes going forward. Where does the balance lie and could they have kept the payments the same?

Arc Resources which went through the conversion to a corporation kept their payments the same through the conversion process. However, they are in a different business and had already cut their payments in 2008. [Maybe they planned ahead to put all the investor angst into one drop instead of two as the tax changes were announced in 2006?].




BullAllTheWay said:


> What's the problem here? Only the fools don't change their behaviour in the face of reality.


The issue for me is that the post that indicated there was a cut seemed to me to imply that the business was tanking. For most people, cuts to the payments suggest the business prospects and/or the way management is running the business has gone bad.

In this case - the cut is due to the loss of the tax exemption. Looking at the payouts since the tax change cut the amount received by the investor, the payouts have been rising so clearly the business is still on a solid footing, despite the tax change.


Cheers


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## Eclectic12

doctrine said:


> Worst case scenario with this stock: ... you'd still have a return of some 35%+ over 7 years. And, if you did any DCA'ing or reinvested the distributions, you'd have a much larger gain.


Which is why I was trying to highlight the change was tax driven - not fundamental change in the business or bad management.


Cheers


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## nortel'd

At 14:40, this afternoon I broke down and sold 50 shares of Boston Pizza Royalties Income Fund (TSX: BPF.UN) for $22.39 each I should have waited for BMO to show up to repurchase Fund units under the Fund's current Normal Course Issuer Bid .

FWIW… I have cut and pasted a 35 minute window how BPF.UN was bought and sold between 15:03 and 15:38 today . BMO Nesbit Burns is 009. Sure looks like BMO is only interested in buying the stock at top dollar. 

Time & Sales	
Price	Size	Exch	Time Buy Sell
22.27	500	TSX 15:38:50 079 007
22.27	100	TSX 15:38:50 002 007
22.27	400	TSX 15:38:50 090 007
22.27	80	TSX 15:34:52 082 085
22.27	200	TSX 15:34:52 090 085
22.28	100	TSX 15:34:52 039 085
22.27	100	TSX 15:34:32 079 085
22.50	40	TSX 15:19:54 009 082
22.50	200	TSX 15:19:54 009 001
22.60	100	TSX 15:09:49 009 001
22.50	89	TSX 15:08:21 082 007
22.51	100	TSX 15:08:21 009 079
22.50	200	TSX 15:08:21 009 007
22.50	100	TSX 15:08:11 099 039
22.68	100	TSX 15:03:19 009 099
22.68	100	TSX 15:03:18 009 079
22.68	100	TSX 15:03:18 009 079
22.68	100	TSX 15:03:18 009 079
22.68	100	TSX 15:03:18 009 085
22.68	100	TSX 15:03:17 009 085
22.68	12	TSX 15:03:17 082 085
22.68	100	TSX 15:03:17 009 002
22.68	100	TSX 15:03:17 009 002
22.68	100	TSX 15:03:17 009 007
22.68	100	TSX 15:03:16 009 007
22.68	100	TSX 15:03:16 009 079
22.68	100	TSX 15:03:16 009 079
22.68	100	TSX 15:03:16 009 079
22.68	100	TSX 15:03:16 009 079
22.68	100	TSX 15:03:15 009 079

With the help of:
http://www.stockhouse.com/companies/level2/t.bpf.un


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## webber22

It's obvious there's been some price "manipulation" by pushing the price up via the ASPP buybacks. The trend is your friend until it ends :encouragement: 
So they have 201 days to do this, although I wouldn't want to be holding the shares when the buybacks end, and they could end early


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## My Own Advisor

I still can't believe this fund does so well. The food isn't that good there.


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## Eder

Try other branches....perhaps your local one sucks. When I'm in Canada its my go to joint if I want a beer and meal....beats the hell out of Earls, Appleby's Montana's etc. Their pizza wins by being a class of their own imo.

Btw Canmore & Sarnia are my fav 2 branches.


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## liquidfinance

I wouldn't call it price manipulation. If there are auto buy backs then they need to pay the market rate. If people want to hold then the price needs to rise to encourage the sellers. Just supply and demand. Not sure why they would want to buy back at such a premium though. I'm considering taking some profit on this one.


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## doctrine

They seem determined to get on with the buyback. I'm sure sellers will be encouraged to arrive soon enough. I'm holding although I'd reconsider if the yield dropped below 5%, which will happen if the shares reach $24.50.


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## Feruk

My Own Advisor said:


> I still can't believe this fund does so well. The food isn't that good there.


Agreed. Anything with the exception of the pizza is quite bad there. From what friends who worked there years ago told me, the rest of the food isn't even made there, just re-heated. Having said that, their prices are cheap, and they're in smaller towns all over the place. BP's is considered "fine dining" in towns. Everyone loves them. Not sure why, but it works.


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## jamesbe

re-heated food is kind of the norm in the industry unfortunately.


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## BullAllTheWay

It's better than what's written here. Their pastas, in particular, are good.


----------



## liquidfinance

BullAllTheWay said:


> It's better than what's written here. Their pastas, in particular, are good.


Yeah I do enjoy their Pasta.


----------



## dave2012

I'm a Boston Pizza fan myself. My wife was not but recently has been warming up to the improvements in food quality compared to previous years. Sure beats anything else we have around here! BPF.UN and ACQ are two of my favorite Canuck stocks these days.


----------



## DavidJD

I go to BP for beer. Watch a game with friends and drink beer. Pub grub too. But I think the bars are adding a substantial element to the profits. Huge mark-ups and easy to prep and serve. "No glass, just the bottle." 

The pasta can taste like crap and these pub/lounges will still rake in the cash.

And sell some pies too.


----------



## doctrine

> BPF.UN and ACQ are two of my favorite Canuck stocks these days.


Concur. It's great having stocks that aren't correlated with the indexes.


----------



## Dmoney

DavidJD said:


> I go to BP for beer. Watch a game with friends and drink beer. Pub grub too. But I think the bars are adding a substantial element to the profits. Huge mark-ups and easy to prep and serve. "No glass, just the bottle."
> 
> The pasta can taste like crap and these pub/lounges will still rake in the cash.
> 
> And sell some pies too.


Alcohol sales don't add to BPF.un results unfortunately 
But the drinkers are generally eaters as well, so BPF wins either way.

If they want to buy back their shares, they'll drive the price up on such a low volume stock. Interesting to see how much they're driving it up, not very good trading and not encouraging for the value of the buybacks.


----------



## Woody

I was looking at BP but their relatively quick gains seems to me like they may have slightly overreached and may stabilize a bit lower soon. I plan on seeing if it will drop a few percentage points before striking the trigger on this one.


----------



## liquidfinance

Having donw quite well with this it's got me thinking about what the current consesus may be. With the current pull back and price is it A good time to add exit or simply hold and enjoy the monthly divi?


----------



## Synergy

liquidfinance said:


> Having donw quite well with this it's got me thinking about what the current consesus may be. With the current pull back and price is it A good time to add exit or simply hold and enjoy the monthly divi?


I plan on holding. Originally purchased at $18 and added a little bit when it dropped down to $21 back in June.


----------



## doctrine

I'm holding with an ACB of $15. It's a $4k capital gain to sell which I really don't want.


----------



## Eder

I sold mine a month or so ago...put the proceeds on Teck...hasnt paid off yet but it will


----------



## Mall Guy

Dmoney said:


> Alcohol sales don't add to BPF.un results unfortunately
> But the drinkers are generally eaters as well, so BPF wins either way.


Interesting . . . I have never looked to own BPF.UN (expanded to far, to fast, too many small/iffy markets), so never looked at the prospectus . . . so you are saying revenue excludes alcohol sales . . . is it the same for the Keg and Sir Corp ?


----------



## My Own Advisor

What is their payout ratio? 

Never liked the food there, I don't think I've been to one in 5 years. I guess enough people like the food there.


----------



## doctrine

They pay out essentially 100% of income. Since 2002 they'd paid out something like $13 in distributions; which is why I bought in at the $15-16 mark. It's a little pricier now; I certainly wouldn't buy above $24 which is when the dividend drops below 5%. You can expect 3-5% a year increases though.


----------



## Synergy

I'm glad I hung on to this one, I was tempted to take some profits. It will be interesting to see if the stock can break out past the 24 dollar mark...

"Boston Pizza Royalties Income Fund Announces Records for Franchise Sales of $193.8 Million for the Second Quarter and $380.2 Million YTD".

http://www.marketwire.com/press-rel...es-1938-million-second-tsx-bpf.un-1818968.htm


----------



## doctrine

With the payout ratio down to 96% from 100% a year ago, that bodes well for an increase in the distribution in the next 6-9 months.


----------



## liquidfinance

I decided to sell $2k worth a couple of weeks back. I still have a reasonable holding but wanted to take some money off the table. As it would have been to upsetting to see the price decline. If the price does start to come down, which I'm hoping it will now interest rates are on there way up, then I will likely add back to my position.

Now I just have Wajax results to worry about tomorrow.


----------



## liquidfinance

Starting to come off the boil a little now. Down another 2% today.


----------



## Synergy

Sold off most of my shares recently at $23 - stock price was pretty flat since May. Still hold a few shares in my TFSA


----------



## doctrine

A lot of income/trust type stocks, primarily non-REITs, have been trending down in the last while. Somewhat unnoticed by the media sites but you can see it. I wouldn't add to BPF yet but if the yield passes above 6% again then it's definitely attractive and I might possibly rebalance into them. That happens at $20.40. It might happen at a higher price if they increase their distribution. Quarterly results in about two weeks.


----------



## swoop_ds

Just wanted to point out that the stock is indeed in the 6% yield realm at market close today.


----------



## webber22

They've been buying back shares again for the last few weeks since announced back in September .... http://www.bpincomefund.com/en/news...tention_to_make_normal_course_issuer_bid.aspx

Down to 20.33 today for a 6.02% yield. Very oversold with a 16.86 RSI. I could see institutions selling off their shares from the highs ( $23) down to today's price. Now you can see Goldman and others start to buy up as it approaches $20. Sell high, buy low would be the goal here. The 6% yield triggered my first tranche buy back in, will add another if it keeps falling.


----------



## liquidfinance

Nice to see a bit of a bounce today.


----------



## Synergy

liquidfinance said:


> Nice to see a bit of a bounce today.


and it keeps going higher - now up 4.5%


----------



## liquidfinance

PZA up 3% as well


----------



## Synergy

http://www.marketwatch.com/story/bo...und-2014-01-02-171733745?reflink=MW_news_stmp

Anyone still hanging on to BPF.UN? Would like to see it creep back up and surpass $23...


----------



## liquidfinance

I would like to see it go back up and not too happy with the way the price has been going but I will continue to hold. They are doing well and it's a nice simple easy to understand model.


----------



## londoncalling

still holding as well.


----------



## doctrine

I still have my shares; I still might rebalance into it at the 6% yield level ($20.40) and if it drops below $20 then I'll be adding for sure. A few months ago I had a bid in at $20.40 and it never filled. I think that a dividend increase is coming in the next quarter, payout was 94% in Q3.


----------



## cannadian

doctrine said:


> I still have my shares; I still might rebalance into it at the 6% yield level ($20.40) and if it drops below $20 then I'll be adding for sure. A few months ago I had a bid in at $20.40 and it never filled. I think that a dividend increase is coming in the next quarter, payout was 94% in Q3.


Have you done a write-up on Boston Pizza? If so I'd love to give it a read. You were one of the guys who invested in Automodular sub $2 right?

I think Boston Pizza is an incredible franchise/brand. Might pick some up next bear market


----------



## donald

I'm looking at pizza pizza.I think these guys are on the mark for the lower end consumer(I've noticed a huge decline in little ceases over the last 2 years esp!and I think it is in large part from what Pza offers,they are cleaning there clock)
I've just noticed Pza come into the Winnipeg market and I must say for a cheap lunch theses guys are good)I like there mthly payout also,bp looks good too but they are in the dine in(alcohol)cat....more than a few analysts I notice like Pza


----------



## webber22

_Jan. 2, 2014 - Boston Pizza Royalties Income Fund (TSX:BPF.UN) (the "Fund") and Boston Pizza International Inc. ("BPI") announced today that effective January 1, 2014, the Fund's royalty pool (the "Royalty Pool") has been adjusted to include the royalties from 12 new full service restaurants opened across Canada_

Stock price went up after the announcement last week. They'll be buying back shares until September 15, 2014, a dividend increase should be in the cards for the spring.
As for Pizza Pizza, many people here own PZA, BPF, SRV.UN and KEG as good monthly dividend payers. 
Since they trade with low volume, you can sometimes pick them up cheap. And when they get over-heated, trim.
The Keg hands out $25 gift cards at the May AGM, maybe next year they'll be blackberries from Fairfax


----------



## Jon_Snow

Yeah, I'm probably buying some of this soon (BPF). My wife and I quite enjoy the food (and the beer). The stock is worth buying for the cactus cut fries alone - so good.


----------



## HaroldCrump

webber22 said:


> As for Pizza Pizza, many people here own PZA, BPF, SRV.UN and KEG as good monthly dividend payers.


MTY is another name in that group, although not a high yield payer (any more).
What do you guys think of the relative valuations of each of these, incl. MTY?
I don't have any retail food services company, and wondering if any of these are good entry points right now.


----------



## PuckiTwo

HaroldCrump said:


> MTY is another name in that group, although not a high yield payer (any more).
> What do you guys think of the relative valuations of each of these, incl. MTY?
> I don't have any retail food services company, and wondering if any of these are good entry points right now.


Own KEG.UN since March 2009. Unfortunately, sold half of my position on recommendation of our former FA. It trades presently at a 10-yr high. Some considerable dips in the last 5 years - I would add if it dips to the lower $14 range. What I hate about KEG is that there is so little research available - at least I can't find it.

Have also an interest in MTY but would feel more comfortable investing if I saw their physical product. I know that they don't have their own restaurants such as Boston Pizza or Keg but there seems to be no marketing presence so that you can check out the brands under their management. Low dividend yield also is a stumbling block for me. Seems that MTY share price rose after Motley Fool Canada recommended it a few weeks ago. We'll see if it holds up.


----------



## HaroldCrump

I wonder if the recent changes in the cheese import tariffs have been priced into these stocks, esp. PZA and BPF.
The CBSA recently closed to loophole around the import of fresh cheese from the US by the pizza restaurants.

http://www.theglobeandmail.com/repo...heese-import-loophole-closes/article16012293/

It was briefly speculated back in the summer and fall that the trade deal with EU might reduce cheese prices, but that is not likely to be so.
It seems that this move by the CBSA is a counter-measure by the govt. to placate the cheese/dairy lobby to repair the damage done by the EU deal.


----------



## Killer Z

I just purchased 250 shares today at $21/share. Just enough to ensure I can DRIP a share each month.

The dividends paid by this fund, along with The Keg and A&W have been great investments for me in this low interest rate environment.


----------



## gibor365

From this sector I hold only SRV and I was thinking to add one of the "pizzas" on small pullback , but cannot decide what is better BPF or PZA  Yield are about the same, PZA has better P/E and payout ratio, but strongly outperformed BPF last year....maybe BFP should "catch up". What do you think?


----------



## jamesbe

Well pza makes the worst pizza in the world so decision was obvious to me lol


----------



## Killer Z

gibor said:


> From this sector I hold only SRV and I was thinking to add one of the "pizzas" on small pullback , but cannot decide what is better BPF or PZA  Yield are about the same, PZA has better P/E and payout ratio, but strongly outperformed BPF last year....maybe BFP should "catch up". What do you think?


Sometimes you need to look beyond the numbers. In Alberta where I'm from, Boston Pizza is a juggernaut. They are more than just a take out place, for many it's a place to slug beers and watch sports, but more importantly, an idealistic family restaurant. In a slower economic time BPs will still be affordable to the average family as a dinner outing.


----------



## nobleea

Killer Z said:


> Sometimes you need to look beyond the numbers. In Alberta where I'm from, Boston Pizza is a juggernaut. They are more than just a take out place, for many it's a place to slug beers and watch sports, but more importantly, an idealistic family restaurant. In a slower economic time BPs will still be affordable to the average family as a dinner outing.


They are. The BP's are everywhere here. The chain was actually started in Edmonton.


----------



## gibor365

jamesbe said:


> Well pza makes the worst pizza in the world so decision was obvious to me lol


I hate both


----------



## jamesbe

Oh don't eat pizza at Boston Pizza though, just burgers and stuff lol


----------



## HaroldCrump

I have eaten at BP a couple of times a year, mainly because we were given either their gift cards or the kids-eat-free coupons.
I found the food pretty pedestrian and quite overpriced.
I guess that makes for a good business and a good stock.

But as a consumer, I find their food barely above fast food quality, but prices restaurant like.
The kids' menu is nothing more than sugar and junk laden fast food.
I wouldn't eat there by paying full price out of pocket, and would never feed my kids there.


----------



## gibor365

We didn't go there for several years and couple of months decided to try it.... imho, it's became much worse than before


----------



## liquidfinance

HaroldCrump said:


> I have eaten at BP a couple of times a year, mainly because we were given either their gift cards or the kids-eat-free coupons.
> I found the food pretty pedestrian and quite overpriced.
> I guess that makes for a good business and a good stock.
> 
> But as a consumer, I find their food barely above fast food quality, but prices restaurant like.
> The kids' menu is nothing more than sugar and junk laden fast food.
> I wouldn't eat there by paying full price out of pocket, and would never feed my kids there.



Each to their own I guess and judging by the numbers a lot of people, thankfully, don't feel the same way.


----------



## Mall Guy

*"the Fund's royalty pool (the "Royalty Pool") has been adjusted to include the royalties from 12 new full service restaurants opened across Canada"*
- pretty sure they also closed two, and because it is a franchise system, I'm guessing not by choice IMO 

_*"I wonder if the recent changes in the cheese import tariffs have been priced into these stocks, esp. PZA and BPF"*_
*"We didn't go there for several years and couple of months decided to try it.... imho, it's became much worse than before" *
- above two comment are connected, food quality has gone down, as input prices have gone up IMO

_*"They'll be buying back shares until September 15, 2014"*_
They are trying to find new growth opportunities, smaller restaurants for smaller markets, express units for food courts and urban locations . . . they have some strong multi-unit franchisees, and some weak individual store owners. Share buyback usually means they are having trouble doing this IMO


----------



## HaroldCrump

liquidfinance said:


> thankfully, don't feel the same way.


Thankfully for the shareholders, I suppose :biggrin:
Investors in tobacco companies feel the same way, too.


----------



## webber22

$21.10 Secondary Offering of Units $35 million via Designated Trade
Current price is 21.40, finally they got the price close to the current price


----------



## gmx

I am looking at BPF (and maybe KEG). If I have room in my tfsa does it make sense to hold it there rather than my margin account? Where do most people hold these funds?


----------



## Synergy

gmx said:


> I am looking at BPF (and maybe KEG). If I have room in my tfsa does it make sense to hold it there rather than my margin account? Where do most people hold these funds?


I'd hold BPF.UN in a registered account. I hold BPF within my TFSA. Most of the distribution is taxable and only a small percentage is ROC. It would be more tax efficient to hold in a registered account, let alone less hassle to keep track of the ACB.

http://www.bpincomefund.com/en/faq.aspx#anchor4


----------



## doctrine

The taxable portion (93-94% of distribution) is classified as an eligible dividend. So while you do have additional accounting in an unregistered account, the tax consequences are not bad.

_Starting with the 2011 taxation year, the taxable component of distributions to unitholders are classified as eligible dividends from a taxable Canadian corporation. Eligible dividend treatment is generally beneficial for Canadian resident investors holding their BPF.UN units in a taxable account compared to the previous classification of ordinary income because of the ability for individuals to claim a dividend tax credit._


----------



## gmx

Thanks for the replies. Started a small position in BPF in tfsa yesterday.


----------



## Butters

almost at the 52 week low
crossed 6% yield today, last time it did that in noc/dec it went up 3% the next 2 days

anyone have an idea what it will do this time?


----------



## Killer Z

SheaButters said:


> almost at the 52 week low
> crossed 6% yield today, last time it did that in noc/dec it went up 3% the next 2 days
> 
> anyone have an idea what it will do this time?


52 week low? It appears to be closer to the 52 week high ......or am I missing something here?


----------



## Zoombie

Killer Z said:


> 52 week low? It appears to be closer to the 52 week high ......or am I missing something here?


BPF.UN
Range	20.30 - 20.44
52 week	20.24 - 23.94
Open	20.40
Vol / Avg.	27,783.00/20,615.00
Mkt cap	305.85M
P/E	24.44

Stats from Google, not verified on Bloomberg but they appear correct by eyeball measure.


----------



## Time4earlyretirement

Not sure if current valuations are attractive yet. 

- They operate in a highly competitive industry
- Payout ratio is above 100% (http://www.marketwired.com/press-re...es-records-241-million-tsx-bpf.un-1876867.htm) ... not matter what metric you're using (OCF, FCF, NI, EBITDA) still too high for my books
- No increase in distribution (and they shouldn't with the payout ratio)
- Yearly performance has not changed over the past few years, yet the price went up
- sizable negative retained earnings makes me think value has deteriorated for a while


thats just my 2 cents


----------



## doctrine

BPF's payout was down to 94% in Q3, but then jumped to 100% because of a poor Q4 (weather a big factor here). Despite that, they had record sales and royalties last year and increasing same stores sales. I think it's prudent not to raise the distribution until they see how Q1 at least plays out due to the cold winter. If the quarterly payout ratios continue to be in the 94% range like they were last year, or even better because it's another year past, then I think there will be a raise by the end of the year.


----------



## Quotealex

Isn't the point of an income trust such as BPF to have payout ratio as close to 100%?


----------



## gardner

Quotealex said:


> close to 100%?


The google data has:
eps = 0.83
dividend = 1.224 (0.10 x 12/yr)

I make the payout ratio 147%. This is not near 100%. It seems to me too high to be sustainable.

Even on low-discount sale price of 20.36 the P/E is 24.45 which is too high for my liking.


----------



## doctrine

With BPF, you have to realize, while there is fluctuations in the net earnings, in the end for this company it is "royalties in -> (minus taxes) -> pay everything out". And royalties are going up 2-3% a year. They cut distributions in 2011, but that was because of the addition of taxes, which now make the distributions very tax friendly. Take away the tax effect, and you can see BPF has increased distributions 14 times since the IPO in 2002, including three times since 2011 and the taxes were introduced. BPF could not raise distributions 14 times in 12 years if the model was not sustainable.


----------



## Bob007

*Share buyback*

It seems that the share buyback program ended last September, around when the SP started it's rather lengthy slide.

Another round of buybacks has been announced, as described in this news release: http://www.bpincomefund.com/en/news...tention_to_make_normal_course_issuer_bid.aspx

However, it appears that buybacks haven't resumed (see http://www.investorpoint.com/stock/...Boston+Pizza+Royalties+Income+Fund/All+Types/).

Has anyone heard if the buybacks will start up again? In the past, they were substantial and seemed to drive and then prop up the SP.


----------



## yyz

And didn't they just finish issuing new shares?

http://www.bpincomefund.com/en/news...ational_announces_closing_of_bought_deal.aspx


----------



## doctrine

Those weren't new shares, those were a secondary offering from the parent company and other owners. 

Quote from your link: "_The Fund did not receive any proceeds from the Transaction_."


----------



## Bob007

So is the secondary offering dilutive? Will it have an impact on the distribution?

The closing of the bought deal appears to have triggered a sudden SP drop. If it is not dilutive, why is the offering bad for shareholders? Maybe I am missing something here.


----------



## Butters

They had a bad season, once that turns around, or they cut dividends (more likely the first option) this stock will turn around... it will bottom out soon i believe
I don't think it will make it to 7% yield

Edit. The volume is starting to grow now.


----------



## Synergy

Picked up a few more shares of BPF today on the dip...


----------



## doctrine

It's not dilutive at all; if anything it will increase the public float and liquidity, which is good. There may be a slight negativity because of that but perhaps because some fixed income stocks, like REITs, are trending lower. I think this is a buying opportunity for sure. It's been a year and a half since it was below $20, and the yield was lower then too.


----------



## Mechanic

I used up some divvy money that had accumulated in my rrsp to pick up some more shares of this today. Good dividend. I have this in rrsp as well as an unregistered account.


----------



## Jon_Snow

Will buy more soon... my wife and I enjoy the restaurant immensely. Cool feeling when you sit down for a meal and know you own a piece of the action.


----------



## Eclectic12

doctrine said:


> ... They cut distributions in 2011, but that was because of the addition of taxes, which now make the distributions very tax friendly. Take away the tax effect, ...


I don't know why people seem to prefer calling the effects of tax changes a "distribution" cut. Using this logic, my employer cut my salary when EI and CPP premiums went up ...

The only action BPF took was to keep the same structure, which dictated the tax rates.

Cheers


----------



## off.by.10

Well here goes a new daily and 52 week low, just bought some at 19,59. Now you can all sit back and watch it drop another 0,50$ over the next few days :/


----------



## the_apprentice

^ Me too!


----------



## the-royal-mail

$19.45. Anyone know what's going on? Have the royalties dried up? What's the purpose for this fund?


----------



## Agrivar

*Drip*

Someone mentioned dripping additional shares on this one. D does not offer one for BPF.UN. Which broker does?


----------



## Killer Z

Agrivar said:


> Someone mentioned dripping additional shares on this one. D does not offer one for BPF.UN. Which broker does?


I own BPF.UN through my CIBC Investor's Edge and it DRIPs.


----------



## Pluto

the-royal-mail said:


> $19.45. Anyone know what's going on? Have the royalties dried up? What's the purpose for this fund?


To me it looks like it trades similar to riets and bonds. It is basically a income/dividend play. It topped out last April, as did riets around the time their yield hit a multi year low of about 5%. Then it goes into a decline in anticipation of higher interest rates. My guess is it will drift/decline into the next bear market, bottom out, and then recover. The cycle will likely repeat itself.


----------



## Eclectic12

Pluto said:


> the-royal-mail said:
> 
> 
> 
> $19.45. Anyone know what's going on? Have the royalties dried up? What's the purpose for this fund?
> 
> 
> 
> To me it looks like it trades similar to reits and bonds. It is basically a income/dividend play ...
Click to expand...

They did decide to keep the same trust structure & pay the extra taxes for not qualifying as a REIT. 

So there's probably room in the mix for analysts/investors to lump it in with similar structures, regardless of where the revenue is coming from or whether it has an interest rate exposure or not.


Cheers


----------



## liquidfinance

Pluto said:


> To me it looks like it trades similar to riets and bonds. It is basically a income/dividend play. It topped out last April, as did riets around the time their yield hit a multi year low of about 5%. Then it goes into a decline in anticipation of higher interest rates. My guess is it will drift/decline into the next bear market, bottom out, and then recover. The cycle will likely repeat itself.


To me it's just trading along with it's expectations. The last 1/4 was so so but nothing spectacular to support a sub 6.0% yield. We have had a brutal winter so I'm sure the next 1/4 will come in beneath expectations with over 100% payout ratio. This will worry people into thinking a cut to the payout is coming. Then come summer people will be flocking to the patios. SSG will recover payout beneath 100% an all will be well.


----------



## Killer Z

Here is some recent information from an analyst that a friend of mine subscribes to:

_March 22, 2014
Boston Pizza Royalties Income Fund is updated and rated (higher) Buy at $19.55. This entity is an ownership in the the 4% franchise fees on the food (not alcohol) sales of Boston pizza restaurants. The cash distributions essentially are almost unchanged when new restaurants open as new units are then issued to founders of Boston Pizza. The distribution rises with increased food sales on a per restaurant basis. The units have recently declined due to a 3.6% decline in distributable cash per unit in Q4 which was blamed on poor weather. On that basis Q1 could also see a decline. Another possible reason for the decline was that the founders sold units in a secondary offering at $21.10 in march. The 6.3% yield is attractive. I believe the recent price decline presents a buying opportunity. Note however, that Q1 2014 should also be expected to be a relatively weak quarter due to poor winter weather across Canada this year. I will likely increase my position.
It's interesting to note that the units were first issued in 2002 at $10.00. The units climbed briefly over $20 in 2006 but were hammered down under $8 with the financial crisis. Those who bought at the IPO in 2002 at $10.00, and have held since, have since collected $14 in distributions in addition to a capital gain of close to 100%. This is a nice illustration of the rewards of investing. At the start of 2009 we rated them a Strong Buy at $7.51. It is stunning to look back now and see how cheap stocks were at the start of 2009 and to remember how scared investors were.
_


----------



## londoncalling

http://web.tmxmoney.com/article.php?newsid=66780694&qm_symbol=BPF.UN

put a bit of a drag on the stock. looking tempting


----------



## blin10

problem with it is that it's not a growth story, it's a pure income play...


----------



## gibor365

blin10 said:


> problem with it is that it's not a growth story, it's a pure income play...


Sure, it's shouldn't be core holding of everyone portfolio, but imho in every portfolio should be some income play


----------



## blin10

gibor said:


> Sure, it's shouldn't be core holding of everyone portfolio, but imho in every portfolio should be some income play


i agree, but I prefer income with a bit of growth potential


----------



## Synergy

I got pretty lucky with BPF. I needed to get it out of my un-registered account and place it inside one of my registered accounts - I ended up selling it close to it's high for a nice capital gain of over 20%, then bought it back and now holding an ACB of $20.88. Not bad for an income play. I wouldn't be surprised if we see a little more growth in the stock going forward - give it a couple quarters.


----------



## gibor365

blin10 said:


> i agree, but I prefer income with a bit of growth potential


imho there is a small growth potential is spring/summer time.... there will be NBA/NHL playoffs and FIFA World Cup....during such events Boston Pizza is usually full of people


----------



## the-royal-mail

Great time to buy this one as it tumbled to $19.91 this morning, which is close to the 52 week low of $19.22.


----------



## Killer Z

the-royal-mail said:


> Great time to buy this one as it tumbled to $19.91 this morning, which is close to the 52 week low of $19.22.


I did not even notice this dip because quite frankly I never pay attention to this position. It's been a long term holding of mine, and simply a steady stock with a nice dividend. Good to have in turbulent times.


----------



## Jon_Snow

Love the restaurant, love the stock. The $40 dividend we get pays for our monthly dinner there.


----------



## indexxx

I bought this in the spring and sold it in the fall- great gain. Hadn't watched it since but thx for the heads up Royal


----------



## gibor365

Killer Z said:


> I did not even notice this dip because quite frankly I never pay attention to this position. It's been a long term holding of mine, and simply a steady stock with a nice dividend. Good to have in turbulent times.


Same here  and imho it's worth to add to BPF.UN (and SRV.UN) on dips... there is a good chance that both Raptors and Leafs will make playoff this year, next year Panam games.... and a lot of people going to those restaurans to watch games.... and this Xmas there will be very popular Junior World hockey


----------



## JosephK

gibor said:


> Same here  and imho it's worth to add to BPF.UN (and SRV.UN) on dips... there is a good chance that both Raptors and Leafs will make playoff this year, next year Panam games.... and a lot of people going to those restaurans to watch games.... and this Xmas there will be very popular Junior World hockey


An important thing to note is that the fund does not get money from the sale of alcoholic drinks. 

Now anyone care to speculate why ALL of these restos took this sudden hit? Just getting dragged down by the market, or is there more to the story?


----------



## donald

You would also think(conventional wisdom)the slashed gas prices would drive more traffic to reso chains from free'd up money not spent at the pump(at least a cycle or 2)general mass population allocated in other directions


----------



## Just a Guy

Jon_Snow said:


> Love the restaurant, love the stock. The $40 dividend we get pays for our monthly dinner there.


Is this considered reinventing? Maybe a new way to drip?


----------



## the-royal-mail

Note the stock has since recovered to $20.72. Hopefully someone here was able to benefit from yesterday's dip and buy in.


----------



## gibor365

the-royal-mail said:


> Note the stock has since recovered to $20.72. Hopefully someone here was able to benefit from yesterday's dip and buy in.


Not me.... Missed it yesterday ....gonna wait until it's down to low 20's ... SRV.UN looks more attractive at current prices


----------



## indexxx

the-royal-mail said:


> Note the stock has since recovered to $20.72. Hopefully someone here was able to benefit from yesterday's dip and buy in.


Again- thanks Royal.:wink:


----------



## the-royal-mail

^ No need to quote me, but the thanks are appreciated. How much did you make from my posts?


----------



## indexxx

Enough to keep me in pizza!


----------



## Killer Z

These stats were just released:

-- System-Wide Gross Sales(1) of $260.2 million for the Period and $1.0
billion for the Year.
-- Franchise Sales(2) from royalty pool restaurants of $197.5 million for
the Period and $781.9 million for the Year.
-- Same store sales growth of 5.3% for the Period and 1.7% for the Year.
-- Distributable Cash(3) per Unit increases 5.8% for the Period and 1.7%
for the Year.
-- Boston Pizza opened eight net new full service restaurants and completed
a record 53 restaurant renovations in 2014.
-- Fund pays out 150th consecutive monthly distribution to unitholders
totalling $15.22 per Unit since the IPO.
-- Trustees declare January 2015 distribution to unitholders of 10.2 cents
per Unit.

http://www.marketwatch.com/story/bo...of-10-billion-for-the-year-2015-02-06-8173157


Not a ton of growth available with BPF.UN, however this is a great steady position with a nice dividend.


----------



## gibor365

Thinking to buy more BPF.UN. Last Q report was pretty good, payout ratio was down, distributions increased.... yiled 7% and it's at 52 weeks low...Any thoughts?


> Franchise Sales(1) from royalty pool restaurants of $202.9 million for
> the Period and $396.3 million YTD, representing increases of 3.2% and
> 3.5%, respectively, versus the same periods one year ago.
> -- Distributable Cash(2) per Unit increased 10.9% for the Period and 9.2%
> YTD.
> -- Payout Ratio(3) of 93.4% for the Period and 97.0% on a trailing 12-month
> basis.
> -- Same Store Sales Growth of 0.1% for the Period and 1.1% YTD.
> -- On May 6, 2015, the Fund completed an acquisition of additional interest
> in Franchise Sales of Boston Pizza restaurants in Canada, which
> subsequently resulted in a 6.2% increase to monthly distributions to
> unitholders beginning with the April 2015 distribution.
> -- Trustees declared July 2015 distribution to unitholders of 10.83 cents
> per Unit.


----------



## indexxx

gibor said:


> Thinking to buy more BPF.UN. Last Q report was pretty good, payout ratio was down, distributions increased.... yiled 7% and it's at 52 weeks low...Any thoughts?


I'm probably going back into BPF- did well last year on it and seems a good entry point.


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## londoncalling

I put in an order this evening for next week. I like the yield and the company. adding here would be a rare average up purchase for me and I am ok with that as the current yield is slightly higher than my first purchase. So many opportunities starting to show. My new fear is not a correction but instead burning through my cash too soon. 

Cheers


----------



## gibor365

> I put in an order this evening for next week.


 planning to do the same


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## londoncalling

The current yield is almost what it was when I bought back in Mar 2012. If it gets there I will add as payout ratio is below its target 17 dividend increases since inception. Growth yr over yr. 

Cheers


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## doctrine

7% yield - very nice at this level. Probably down because Boston Pizza is associated with Western Canada; I don't know the numbers, but I would guess 30-50% of the restaurants in Canada are west of Ontario. SSSG numbers are 0-1% year over year, so you need to keep an eye on that. It's really unlikely they'd reduce the distribution unless there was an implosion, but probably won't hit the $20s again until the Canadian economy picks up. I sold my shares at $21.25 last year but this has my eye again now, especially if it keeps dropping.


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## gibor365

Added small position today... don't really understand why sell off is going on... maybe I don't know something ?!


> Probably down because Boston Pizza is associated with Western Canada


 yesh, but this is cheap place ... I understand that people can attend more expensive fine dining places, but pizza ?!


----------



## jaybee

Just started a new position. Looks like some insider buying going on lately too.


----------



## Xoron

I ate at a BP for the first time in many years last weekend. I was thoroughly unimpressed with the food, and won't be returning anytime soon.


----------



## gibor365

Xoron said:


> I ate at a BP for the first time in many years last weekend. I was thoroughly unimpressed with the food, and won't be returning anytime soon.


I'm unimpressed with practically all Canadian food chains, maybe except The Keg 
Generaly , I don't invest in companies based on my "impression" from than  , maybe except PM/MO


----------



## Xoron

gibor said:


> I'm unimpressed with practically all Canadian food chains, maybe except The Keg
> Generaly , I don't invest in companies based on my "impression" from than  , maybe except PM/MO


True, most chain food isn't great. But BP is so bad that it would turn me from buying the stock. Unlike other hated companies in Canada (I'm looking at you BCE / Rogers / Telus), who's stock I'd be happy to own.


----------



## gibor365

Xoron said:


> True, most chain food isn't great. But BP is so bad that it would turn me from buying the stock. Unlike other hated companies in Canada (I'm looking at you BCE / Rogers / Telus), who's stock I'd be happy to own.


True! And in Europe, imho, BPF would go bankrupt long time ago, but North Americans (even my kids) have different taste and priorities ... 
Also, BPF has pretty good sport-bars ... nice big TVs and tolerable by NA standards draft beer , so many ppl (include my son and his friends) go there to watch games and eat/drink something same time...


----------



## besmartrich

gibor said:


> True! And in Europe, imho, BPF would go bankrupt long time ago, but North Americans (even my kids) have different taste and priorities ...
> Also, BPF has pretty good sport-bars ... nice big TVs and tolerable by NA standards draft beer , so many ppl (include my son and his friends) go there to watch games and eat/drink something same time...


Whenever I go BP, they are typically packed with people. Taste of food is totally subjective and cannot make everyone happy. Some people love KEG but I found their food is a bit salty. I objectively think I am a good cook but my wife is not a big fan of me.  All I care are same strong store sales growth and more stores being included in the Royalty fund to make the future income more appealing. I almost pulled the trigger today but did not as I have to sell VCE to buy it. VCE? BP? It is a tough decision to make for me


----------



## HaroldCrump

Xoron said:


> I ate at a BP for the first time in many years last weekend. I was thoroughly unimpressed with the food, and won't be returning anytime soon.


I agree & said the exact same thing back in *Post # 104*


----------



## londoncalling

Getting tempted to add to this one. Anybody else excited by the recent decline in share price?


----------



## celishave

londoncalling said:


> Getting tempted to add to this one. Anybody else excited by the recent decline in share price?


I am thinking of selling and getting into A&W instead. Recent report indicated restaurant sales in Alberta decreased year over year and of course BPF is all over Alberta. Not a positive sign. If their SSSG goes negative it wouldn't be pretty although it has already experienced quite the haircut. I just think A&W will do better in a poor economy and their last quarter SSSG was phenomenal.


----------



## doctrine

6.2% increase in distributions.

http://www.stockhouse.com/news/pres...-fund-increases-monthly-cash-distributions-to

With an 8.3% dividend, 94% payout and 1.8% yoy same stores sales growth, Boston Pizza looks like it has not been affected (yet) by the slowdown out west. Very interesting here under $17.


----------



## londoncalling

Very interesting indeed. Had considered averaging down when it was in the low 16s. the payout ratio has really got me considering averaging up in the high 16s. Waiting to see when the rest of the market stops its slide.


----------



## besmartrich

londoncalling said:


> Very interesting indeed. Had considered averaging down when it was in the low 16s. the payout ratio has really got me considering averaging up in the high 16s. Waiting to see when the rest of the market stops its slide.


It went up by 17% during for last 30 days. I should have pulled the trigger.


----------



## Mookie

Anyone buying or interested in Boston Pizza these days? It's been on my watch list for quite a while, but I've never pulled the trigger. Of course, with hindsight, late January was the time to buy, but for the last 3 months, the price has been just hovering at around $18.50. The 7.4% yield is tempting, if the share price will hold over the long term.


----------



## gardner

I've been contemplating off and on also. I missed the January window too. It seems to be unnaturally flat at 18.60 +/- .05 since February and it makes me wonder how that could be so. The small market cap and the outward appearance of some sort of price manipulation makes me stay my hand, at least so far.


----------



## amack081

Mookie said:


> Anyone buying or interested in Boston Pizza these days? It's been on my watch list for quite a while, but I've never pulled the trigger. Of course, with hindsight, late January was the time to buy, but for the last 3 months, the price has been just hovering at around $18.50. The 7.4% yield is tempting, if the share price will hold over the long term.


I got in at 17.83 last August and it makes up nearly 5% of my portfolio. I'm content with little price fluctuations at the moment and a solid dividend stream monthly. 
Based on my analysis, I would give it a "hold" rating at present time. Same Store Sales Growth only increased by 0.05% given the economic decline in Alberta. I also think that their quarterly results will be further weakened by less people going to BP to watch playoff hockey. The other key performance indicator was that there were 6 BP franchises opened compared to last year.


----------



## DividendLuvr

I've been holding BPF and DRIPing for about 2 years now. I considered averaging down when it dipped below $17, but chose to deploy my free cash elsewhere. I agree with amack081 - it's a great hold with a steady dividend. Not sure there is much upside potential for price appreciation right now, however.


----------



## amack081

DividendLuvr said:


> I've been holding BPF and DRIPing for about 2 years now. I considered averaging down when it dipped below $17, but chose to deploy my free cash elsewhere. I agree with amack081 - it's a great hold with a steady dividend. Not sure there is much upside potential for price appreciation right now, however.


Since my comment 6 % increase in the stock. I'm not complaining! For those looking to purchase, I would still wait on it.


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## DividendLuvr

Now cresting $21! Can you go comment on some other threads, amack081 ;-)!


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## amack081

DividendLuvr said:


> Now cresting $21! Can you go comment on some other threads, amack081 ;-)!


I seem to be good luck for Boston Pizza. Every time I post, it goes up! Enjoy the rise today 

For the record, I sold my position at 20.90 last week (bought August 2015 at 17.83) for a ~16% gain after commission excluding dividends. Normally I let my gains run especially when they pay nice dividends; however I'm skeptical of this ~13% rise in the last month without any earnings reports. My sentiment is that investors are moving to 'safe investments' such as income funds due to the uncertainty of Brexit which can be explained by the overall increase in volume.


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## amack081

^
Totally jinxed BP today.


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## DividendLuvr

I sold my shares in this and in PZA to lock in some capital gains. Happy to buy back in in the $17-18 range for BPF (and $13 for PZA).


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## Mookie

After watching this one for quite some time, I finally had the opportunity to buy some BPF.UN last week as part of some portfolio rebalancing. Of course in hindsight I should have picked up some earlier this year, but so long as the share price holds over the long term I will be happy to just collect the 6.25% dividend.


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## amack081

Its close to reaching its all time high. With that said, I don't think the valuation is terrible to be entering at present time given the latest financial results (1.10% quarterly revenue growth since I last posted). Payout ratio is still in the 70% range. I concur with your strategy.


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## doctrine

I probably wouldn't buy here, although the SSSG sales stability is encouraging. One piece of advice, you have to look at 12 month trailing payout ratio, as sales are seasonal and it is lower in the summer and higher in the winter. It is almost certainly in the 95-100% range.


----------



## amack081

doctrine said:


> I probably wouldn't buy here, although the SSSG sales stability is encouraging. One piece of advice, you have to look at 12 month trailing payout ratio, as sales are seasonal and it is lower in the summer and higher in the winter. It is almost certainly in the 95-100% range.


Although I don't own the share anymore its stick on my tracking sheet.

Please correct me if I'm wrong but I was under the impression that Morningstar used ttm for its payout ratio...

I have YTD at 71.9%
Last quarter (September) at 66%
Prior Year fiscal year end was over 100%...


----------



## doctrine

I always use the company's own numbers.

From the BPF Income Fund website press release for Q3 results (http://www.bpincomefund.com/en/news...reases_of_2_2_for_the_period_and_3_4_ytd.aspx)

*Payout Ratio of 91.8% for the Period, 98.2% YTD and 96.9% on a trailing 12-month basis. Cash balance at the end of the Period was $3.6 million.*

These are the numbers you should be using. 97% on a 12 month basis. If SSSG remains positive, there could be a 3-4% increase in distributions next year. They're doing okay, but a 72% payout ratio it is not. They pay out *everything*.


----------



## gibor365

doctrine said:


> I always use the company's own numbers.
> 
> From the BPF Income Fund website press release for Q3 results (http://www.bpincomefund.com/en/news...reases_of_2_2_for_the_period_and_3_4_ytd.aspx)
> 
> *Payout Ratio of 91.8% for the Period, 98.2% YTD and 96.9% on a trailing 12-month basis. Cash balance at the end of the Period was $3.6 million.*
> 
> These are the numbers you should be using. 97% on a 12 month basis. If SSSG remains positive, there could be a 3-4% increase in distributions next year. They're doing okay, but a 72% payout ratio it is not. They pay out *everything*.


They may also pay special dividend, like KEG.UN did last year


----------



## amack081

doctrine said:


> I always use the company's own numbers.
> 
> From the BPF Income Fund website press release for Q3 results (http://www.bpincomefund.com/en/news...reases_of_2_2_for_the_period_and_3_4_ytd.aspx)
> 
> *Payout Ratio of 91.8% for the Period, 98.2% YTD and 96.9% on a trailing 12-month basis. Cash balance at the end of the Period was $3.6 million.*
> 
> These are the numbers you should be using. 97% on a 12 month basis. If SSSG remains positive, there could be a 3-4% increase in distributions next year. They're doing okay, but a 72% payout ratio it is not. They pay out *everything*.


Boston Pizza is calculating its payout ratio as FreeCashFlow/Dividends paid. In contrast, I'm using the simplistic approach of DPS/EPS or Dividends/Net Income.

My approach is more simplistic, conservative (see flaw of their method below) and answers directly 'what percentage of dividends being paid from earnings' but has the flaw that dividends aren't paid from earnings. 

I agree with their presentation of the payout ratio (especially because income funds are suppose to redistribute to shareholders) and should have realized when posting earlier because they aren't involved in capital expenditures and the do deduct interest. However, the flaw in their presentation (in applying it to other industries), is that there is a possibility of showing negative free cashflow (if there are high regular capital expenditures or R&D) which would show a negative payout ratio...

They even state "...Payout Ratio are non-IFRS financial measures that do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers".

Cheers,


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## Mookie

Well, my first 5 weeks in the pizza business has been pretty good. You can accuse me of counting my pizzas before they're fully baked, but I'm up 4.3% on share price so far, and I collected my first monthly dividend at the end of December. 

My only minor complaint is that I can't DRIP this one. Oh well.


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## londoncalling

BPs has treated me very well over thepast 5 yrs. I do regret not adding to it over a year ago in the $16.XX range. got too greedy with my bid price. My guess is eventually I will get another opportunity. Nice work on your return mookie! the cap gains will likely continue to slowly increase in time but the distributions seem to be stable. Guessing this will become a dividend aristocrat at some pt. Also like the royalty structure with this company. 

Cheers


----------



## londoncalling

It's been over a year since anyone (me) has posted here. The market was crazy last week while I was out of the country. 

http://www.msn.com/en-ca/money/tops...t-week’s-big-sell-off/ar-BBIJq9E?ocid=SL5MDHP

The last time this one yielded over 7% was after a bad quarterly in 2016. Looks like it happened again. As my post above indicates I was expecting another opportunity in the future. Thursday may have been the day. Wonder when the next one will be?

Cheers


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## milhouse

I've held a few shares over the last number of years. The payout's been solid. However, my concern is that while they are growing total number of stores, it seems like their annual SSSG is kind of stagnating which seems to be an industry-wide issue as consumer dining preferences appear to be shifting.


----------



## carson

I own BPF and I picked up a few more shares on Feb 2nd for a decent price. I think it's a solid company and SSSG should improve if/when the Alberta economy picks up steam again. However the stock price could get pushed down depending upon how high interest rates get over the next few years. I've been happy with the steady monthly paycheck so far.


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## Eder

I haven't held Boston Pizza for a few years...worried that its too crowded a market for $7 beers. I do love their pizza though. I also dumped my Pizza Pizza before Christmas, looking to get back in much lower. I bought back into A&W though about 15% too soon lol, but they are still batting .400 and think they will be the junk food winner winner chicken dinner.


----------



## carson

Eder said:


> I haven't held Boston Pizza for a few years...worried that its too crowded a market for $7 beers. I do love their pizza though. I also dumped my Pizza Pizza before Christmas, looking to get back in much lower. I bought back into A&W though about 15% too soon lol, but they are still batting .400 and think they will be the junk food winner winner chicken dinner.


That's a good point but the fund get's it's income from royalties on the food not the alcohol. BP international takes the booze profits. If they can increase their market share in the take out business that would be a winner for the fund.


----------



## Eder

Ya thanks for pointing that out although my $7/beer comment was basically grouping BP,Keg,Cactus Club,Milestones,Moxies,Earls,Original Joes and 100 other iterations of faster food where prices are higher & booze is really high.
I don't think younger people make enough money to support all these joints.


----------



## doctrine

Eder said:


> Ya thanks for pointing that out although my $7/beer comment was basically grouping BP,Keg,Cactus Club,Milestones,Moxies,Earls,Original Joes and 100 other iterations of faster food where prices are higher & booze is really high.
> I don't think younger people make enough money to support all these joints.


Perspective is important. $7 is on the cheaper end in most cities these days. $8-9 is much more common, especially after tax. And I see plenty of young people out spending like I did back in the day


----------



## CdnJedi

Hi there - Do most of you keep BPF in your TFSA or RRSP for tax simplicity. Thanks!


----------



## gardner

I have BPF unregistered. It pays 80% eligible dividends and 20% return-of-capital, both of which are advantageous in taxable accounts.

http://www.bpincomefund.com/ir-resources/faqs/default.aspx


----------



## CdnJedi

gardner said:


> I have BPF unregistered. It pays 80% eligible dividends and 20% return-of-capital, both of which are advantageous in taxable accounts.
> 
> http://www.bpincomefund.com/ir-resources/faqs/default.aspx


Thanks. During your ownership, has that split been consistent?


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## Eclectic12

Not sure why you'd bother with however long gardner has owned it when the historical breakdown is available from the web site.

You can go "Stock", "Distributions" ... pick a year then get the detailed tax breakdown for that year.

Or you can go "Investors Resources", "FAQS" ... "What is the tax treatment of distributions?" to get a nice chart from 2017 back to 2002.
http://www.bpincomefund.com/ir-resources/faqs/default.aspx


Cheers


----------



## CdnJedi

Eclectic12 said:


> Not sure why you'd bother with however long gardner has owned it when the historical breakdown is available from the web site.
> 
> You can go "Stock", "Distributions" ... pick a year then get the detailed tax breakdown for that year.
> 
> Or you can go "Investors Resources", "FAQS" ... "What is the tax treatment of distributions?" to get a nice chart from 2017 back to 2002.
> http://www.bpincomefund.com/ir-resources/faqs/default.aspx
> 
> 
> Cheers


Thank you. 

P.S If someone is not sure about something, generally they ask for help.


----------



## Eclectic12

Fair enough.

Though where one has been checking out companies for a while, spending time in the "Investor" section of the web site is a good place to start.



Cheers


----------



## londoncalling

CdnJedi said:


> Hi there - Do most of you keep BPF in your TFSA or RRSP for tax simplicity. Thanks!


I've held Boston Pizza for years in my RRSP account. Now that my RRSP is maxed and will continue to be so I have started purchasing it for my TFSA. At some point I will sell my RRSP position to add more room for US positions.

Cheers


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## Mookie

This stock has been on a pretty significant decline over the past 18 months. Should I be worried?


----------



## milhouse

I'm not hitting the panic button yet. A lot of restaurant stocks have had their share prices hit this year. 
Their same store sales growth been flat. It doesn't bode well for increases to the distribution but I think their dividend is safe even though their payout ratio YTD is over 100% but was fairly under in Q3. 
I still think they have a niche in the casual restaurant / sports bar sector of the restaurant industry. It would help if the economy picked up more in Alberta where they have the second most stores. On the plus side, new stores are opening for a net gain and will be added to the pool.


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## Mookie

Thanks Milhouse, I see there was a recent news release, stating that the fund has received approval for a Normal Course Issuer Bid over the next 12 months. I'm hoping this is good news overall. Meanwhile I'll continue to hold this one for the long term, and collect the dividends.

Nov 26, 2018: _"Boston Pizza Royalties Income Fund (the "Fund") (TSX: BPF.UN) announced today that it has received Toronto Stock Exchange ("TSX") approval of a Notice of Intention to Make a Normal Course Issuer Bid through the facilities of the TSX and other Canadian marketplaces from November 28, 2018 to no later than November 27, 2019. The Normal Course Issuer Bid will permit the Fund to repurchase for cancellation up to 115,000 units of the Fund (the "Units"), being approximately 0.5% of the Fund's issued and outstanding Units (as at November 26, 2018). The Fund has 21,886,063 Units issued and outstanding as at November 26, 2018. The average daily trading volume of the Units for the period between May 1, 2018 and October 31, 2018 was 32,659 units. In accordance with the rules of the TSX, the maximum number of units that can be purchased on a daily basis by the Fund is 8,164 Units, subject to the block purchase exception.

The board of trustees of the Fund believes that, from time to time, market conditions provide opportunities for the Fund to acquire Units at attractive prices and that the purchases are an appropriate use of funds that will enhance unitholder value."_​


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## Invest1935

The fund has been performing well historically but there are some issues. It is doubtful that franchisees are making any money or earning an ROI that is acceptable. The risk for investment in the restaurant industry will continue to outweigh the rewards. If franchisees don’t make money, the system will collapse which makes the top-line revenue model one built on a false sense of security. Would consider getting out before it likely goes down further.


----------



## doctrine

_On a Franchise Sales basis, SSSG was negative 0.2% for the Period and negative 0.4% YTD compared with positive 0.4% and negative 0.5%, respectively, for the same periods in 2017.
...
On a trailing 12-month basis, the Fund's Payout Ratio was 103.4% as at September 30, 2018_

The fund can sustain a payout ratio slightly above 100% for a while, but not forever. It certainly means increases are off the table. And the stock price is adjusting to the expectations of future returns going down. It's why the stock price is down 37% year to date. 

Boston Pizza takes a 5.5% top line royalty from all restaurants. This is probably close to their entire net profit margin on a restaurant basis. And none of this money gets reinvested in the business. Same store restaurant sales are essentially flat in the last five years, which means that they are down significantly after inflation - I guarantee you that restaurant fixed costs aren't flat. Something has to give.


----------



## jargey3000

plus, i dont particularly like their pizzas ..(or it it pizza's these days...day's?)


----------



## mattw

Note that the royalty is not paid on drinks, only food.


----------



## SixesAndSevens

mattw said:


> Note that the royalty is not paid on drinks, only food.


right on..no royalty on the high margin business, just on the low margin low growth business...
this is a dead stock...


----------



## londoncalling

Reviving another old thread and not sure if there is another thread on this restaurant royalty. Almost fell off my chair today when I saw it was up 43% on the announcement that the dividend was being reinstated albeit at a reduced rate





__





TMX Money







money.tmx.com


----------



## Ponderling

My restaurant mad money these days is in a tfsa, and is a us stock, Papa Johns. Not a lot of sit down. Just a good take out pizza joint with good management, in my opinion. So with covid, people are still doing take out comfort food, and pizza is part of that milieu.


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## milhouse

londoncalling said:


> Almost fell off my chair today when I saw it was up 43% on the announcement that the dividend was being reinstated albeit at a reduced rate


That's good news. However, I still should have sold them off at $21 since they don't fit my portfolio strategy.


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## AltaRed

At least unitholders now understand how vulnerable 'royalty trusts' are to market conditions. The royalty gets wiped out when franchise margins disappear.

Beware buying something almost exclusively for the yield.


----------



## MrMatt

AltaRed said:


> At least unitholders now understand how vulnerable 'royalty trusts' are to market conditions. The royalty gets wiped out when franchise margins disappear.
> 
> Beware buying something almost exclusively for the yield.


Part of the problem is that people seem to forget that they're buying businesses.


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## doctrine

The royalty is so high, that BPF.UN is essentially Boston Pizza, or at least a representation of substantially all of their net earnings in a low margin business. Big restaurant chains have failed in the past and so could Boston Pizza; if times became tough for long enough the company and franchisees could just go bankrupt and walk away and then how much would the trademarks actually be worth.


----------

