RE:Mr. Lube Royalties
Tommy123 wrote: Keep in mind that Mr. Lube royalties will likely soar this year. Oil prices, of course, are sharply increasing, which means that Mr. Lube will pass along this input cost to customers. Since DIV gets about 8% of sales, this should mean a large jump in their royalty payments to DIV in the next couple quarters. As Mr. Lube is by far their largest royalty holding, this could completely change the trajectory of DIV in terms of how high they'll be able to increase their dividend in the short to medium term. Mr. Mike's will likely also see soaring food prices this year, and with Covid ending, should mean a much higher royalty contribution than pre-Covid as restaurant prices rise sharply. Honestly, I think $4 a share isn't out of the question by the end of the year, if oil stays high, and inflation ramps up.
With the current assets and maths, I feel $3.50-3.70 is about our high potential even with a 2-3 cent yearly bump in dividend, and I think it's closer to the low end of that. The current price action I think is forward looking is pricing in 24 cents a year payout, which I'm on board with.
I seen a couple people have talked about taking us out in M&A, who would be someone interested in us? I kinda seen us as the purchaser of someone/thing else. Most royalty plays are rather concentrated in a certain sector to target, as our name implies we are rather diversified. I could see Mr Mikes bought from us by a restaurant based portfolio. Maybe a Brookfield specialty fund/sub could be formed and eat us, or a private fund, but is anyone else really in our realm.