DIV performanceAs mentioned by a previous poster, the DIV business plan is to collect royalty payments from clients and pay the majority of royalties as dividends to shareholders. Shareholder dilution happens with every acquisition and that limits share price growth. They are doing a pretty good job following through with their business plan.
When they announced the BarBurrito acquisition, they increased the dividend by 2.1%. Today they are increasing it another 2% meaning BarBurrito royalties increased the dividend by 4.1%. Anyone buying today will get a dividend yield of 9%. Not bad for a small diversified company.
Is the dividend sustainable? Well the pro-forma payout ratio (meaning payout ratio after including Barburrito royalties) is 84.7% and 74.1% after DRIP. Based on their business plan, the dividend is sustainable. A severe recession could change things but a sever recession does not appear likely at this point.
Dilution is not the only reason the share price is lower as noted by previous posters. High interest rates is a significant culprit. Just look at the big name dividend payers and you see their share price has nose dived since interest rates went up. It is reasonable to expect that DIV will see a material increase in share price once rates start falling. $3.50 to $3.75 is not an unrealistic target in a lower interest rate environment.
In my opinion, the biggest risk for DIV and the dividend is Mr Lube being such a large part of their royalty income. At the end of Q3 Mr Lube represented 51% of the royalty income. However, after adding BarBurrito, Mr Lube will be about 33% of royalty income. This is much better and if there is one more acquisition coming, along with growth from the other royalty partners, Mr Lube's share of the revenue stream should be more balanced and mitigate this risk. Electric cars is a risk for Mr Lube however, EV cars are facing headwinds and buyer resistance so EV should not be a factor for another 6 to 9 years or longer should the 2035 EV date in the USA get pushed out.
Personally, I'm here for the dividend. Based on share price I'm slightly ahead but I've collected a generous growing dividend and am quite happy with that.