# Keg Royalties Income Fund (KEG.UN)



## Killer Z (Oct 25, 2013)

After a fairly strong run over the past 5 years, this one is taking a bit of a dip ..........down almost 7% in the last 5 days. Any idea why? 

I have always been a fan of this restaurant. I do not own shares myself, but the yield is fairly attractive (5.93%), and I heard that shareholders receive a gift card each year in the mail :encouragement:


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## the-royal-mail (Dec 11, 2009)

Story of 2-26:

_The Keg's same store sales (sales of restaurants that operated during the entire period of both the current and prior years) decreased by 0.6% in Canada and increased by 0.3% in the United States ("U.S.") for the 13-week period ended December 29, 2013. For the 52-week period ended December 29, 2013, same store sales decreased by 0.8% in Canada and increased by 1.5% in the U.S_

http://www.digitaljournal.com/pr/1757962


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## webber22 (Mar 6, 2011)

I'll be waiting for the $25 gift card in April, gotta love those freebies :apple:


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## gibor365 (Apr 1, 2011)

webber22 said:


> I'll be waiting for the $25 gift card in April, gotta love those freebies :apple:


How many shares do you need to hold to get gift card?!


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## Homerhomer (Oct 18, 2010)

gibor said:


> How many shares do you need to hold to get gift card?!


I would like to know as well, hopefully one is enough ;-)


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## gibor365 (Apr 1, 2011)

Homerhomer said:


> I would like to know as well, hopefully one is enough ;-)


That what i was thinking the same  It would be the best investment, for $15 get annually $25  Also wondering what is deadline for buying the stock 
btw, it can be a good buy at current price


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## bflannel (Apr 21, 2013)

Is it best to hold these income funds in an RRSP or which account do most of you keep them in? What about dripping the income for more shares, do any of you do this for the KEG.un?


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## doctrine (Sep 30, 2011)

You can hold a KEG in any account; if it is non-registered, the dividends are eligible so they are taxed at a lower rate than say interest or foreign dividends.

Personally, I still prefer Boston Pizza in this realm; the yield is just a little lower (5.7% vs 6.1%) but with positive same stores sales you are far more likely to see an increase to distributions than KEG. And that means you are also more likely to see capital gains.


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## Eclectic12 (Oct 20, 2010)

From the distribution page, over time it's been converting most of the distribution to be eligible dividends.

So some factors to consider are that:

a) there's bookkeeping for the RoC (can be done once a year), which an investment that pays 100% eligible dividends won't have. The RoC part of the distribution is taxed as a capital gain either when sold or yearly if the ACB falls negative.

b) if one is at a higher income level in Ontario, the RoC is going to mean paying a slightly better tax rate than 100% dividends (ex. 21.70% on CG versus 25.40% for eligible dividends).
http://www.taxtips.ca/taxrates/on.htm

c) if one is approaching income levels for an OAC clawback, the eligible dividend part of the payout is going to mean reporting $1.38 in income for each $1 of eligible dividend received.


It's up to the investor to decide if they'd rather not deal with the bookkeeping and are willing to forgo the dividend tax credit by holding this in a registered account (ex. RRSP or TFSA).


Cheers


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## Kaitlyn (May 13, 2011)

Eclectic12 said:


> From the distribution page, over time it's been converting most of the distribution to be eligible dividends.
> 
> So some factors to consider are that:
> 
> ...


RoC has always been a scary thing for me, from a bookkeeping perspective. Are KEG and BPF the same in this regard?

If I invest via TD Direct Investing, and am not frequently buying/selling the shares, wouldn't the year-end tax document take care of this?


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## Eclectic12 (Oct 20, 2010)

It is irritating to wait for the breakdown to be reported and then re-calculate the ACB. However, I've found that with a good spreadsheet (or investment tracking software) and keeping current, unless one has a ton of them - it ends up being similar to reconciling a credit card statement.

The time it was horrible for me was when I didn't realise what was required, several trusts were bought out in the years since the purchase and the RoC info was difficult to get. The math is tedious but relatively easy. Some who had the same issue used the service at the following url.http://www.acbtracking.ca/


In terms of having a mixed distribution (i.e. RoC plus other types) then yes BPF is the same as for 2013 6.27% of the distribution was RoC. I didn't confirm what types of income made up the rest of the taxable part of the distribution.
http://www.bpincomefund.com/en/faq.aspx#anchor4


I'm not aware of *any* broker or financial institution that will take care of RoC for a stock, income fund or ETF with their tax documents (year end or otherwise). What I receive are the year end T3 or multiple T3's usually have a summary document that will detail the RoC in one place. It is helpful information but the forms don't calculate the ACB.

I receive the same for a stock that pays only eligible dividends. The year-end summaries and tax documents may provide needed number such as the proceeds, commissions and if the stock was bought/sold in the same year, the cost but it does not calculate the ACB. Even if it did - I've seen enough errors over the years that I prefer to have my own calculations as a double check.


Cheers


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## milhouse (Nov 16, 2016)

Looks like Cara Operations is about to buy Keg Restaurants limited which appears to be the operating arm of the Keg which is arms length from Keg Royalties Income Fund (KEG.UN). KEG.UN seemed to spike a bit at opening and then settled back down whereas Cara jumped and stayed up. 

I'm curious if any synergies and economies of scale gained by bringing in the Keg under the Cara umbrella will help sales and correspondingly drive distributions for KEG.UN?


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## Eder (Feb 16, 2011)

Its a crowded market to sell $18 hamburgers & $8 beer. Maybe they could add stripper poles and...err I guess thats too '80's.


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## rl1983 (Jun 17, 2015)

The consensus online ( facebook comments tacked onto the news story ) seems to be very negative. A lot of people don't see Cara as a great company and has a history of lowering quality and increasing prices. They are well known for their terrible food service on airplanes. If you are invested in this, watch it closely.


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## milhouse (Nov 16, 2016)

I'm more interesting in KEG.UN because they seem pretty busy for dinner. It's not like I go there often. We might try to go once or twice a year. You can never seem to drop in, you need to make reservations or you might be able to grab a seat in the lounge. 

There were some additional articles in the G&M. What I took from it was that is was more of a merger of equals vs Cara taking over the Keg. Cara doesn't seem to have great operations. They've been able to grow their sales overall though acquisitions but their same store sales numbers are stagnant. The Keg on the other hand has apparently been doing so great that KEG.UN is issuing a special distribution. It sounds like the goal is to have The Keg bring their operational know how over to Cara's restaurants while Cara may be able to provide additional purchasing power to The Keg.


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## gibor365 (Apr 1, 2011)

Planning to add to my KEG.UN position. it's practically at 52 weeks low and has pretty reasonable P/E, P/FCF, payout .... and juicy 6.5% dividend


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## GalacticPineapple (Feb 28, 2013)

gibor365 said:


> Planning to add to my KEG.UN position. it's practically at 52 weeks low and has pretty reasonable P/E, P/FCF, payout .... and juicy 6.5% dividend


P/b of 2.2? I don't see much of a moat to justify it trading at such a premium to book value. Half the restaurants in Canada are exactly like the Keg.


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## Dilbert (Nov 20, 2016)

Yes, but The Keg has the best bacon wrapped scallops, IMHO.:tongue:


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