VANCOUVER, British Columbia, July 29, 2021 (GLOBE NEWSWIRE) -- Diversified Royalty Corp. (TSX: DIV and DIV.DB) (the “Corporation” or “DIV”) is pleased to announce a 5% increase to its monthly dividend and the preliminary results for its royalty partners for the three months ended June 30, 2021 (“Q2 2021”).
Increase to the Monthly Dividend
DIV’s royalty partners are experiencing positive trends, driven primarily by the relaxing of COVID-19 restrictions across Canada. As a result, the Board of Directors of the Corporation (the “Board”) has approved an increase to the monthly dividend from $0.01667 per share per month ($0.20 per share on an annualized basis) to $0.0175 per share per month ($0.21 per share on an annualized basis) effective August 2021.
On March 31, 2020, DIV reduced its annual dividend by 15% from $0.235 per share to $0.20 per share due to the impacts of COVID-19 on DIV and its Royalty Partners. As a result of the reduced dividend and improvements in the performance of DIV’s royalties, DIV’s average payout ratio in Q3 2020, Q4 2020 and Q1 2021 (all quarters directly impacted by COVID) was approximately 95%, while DIV’s Q2 2021 payout ratio is expected to be approximately 90%. In addition, on May 1, 2021, DIV completed the purchase of incremental royalties from its largest royalty partner, Mr. Lube Canada Limited Partnership (“Mr. Lube”) through the addition of 13 new stores to the Mr. Lube Royalty pool and an incremental 0.5% increase to the royalty rate paid by Mr. Lube on non-tire sales, which transactions are expected to increase distributable cash by approximately $0.01 per share (on an annualized basis) and further reduce DIV’s payout ratio.
Sean Morrison, President and Chief Executive Officer of DIV stated, “The combination of positive trends in our royalty partners (especially our largest partner, Mr. Lube) and our recent accretive incremental royalty purchases from Mr. Lube have resulted in an increase to DIV’s distributable cash and provided DIV with the ability to increase its dividend. We remain cautiously optimistic that the positive trends being experienced by our royalty partners will lead to a meaningful recovery of their respective businesses. Our Board, in consultation with management, regularly reviews our dividend policy and will continue to do so going forward. If our royalty partners continue to experience positive trends, DIV will consider further increases to its dividend while maintaining a target annual payout ratio below 100%.”
https://www.globenewswire.com/news-release/2021/07/29/2271337/0/en/Diversified-Royalty-Corp-Announces-Increase-to-the-Monthly-Dividend-and-Preliminary-Q2-2021-Results-for-its-Royalty-Partners.html