Boston Pizza Income Fund(Symbol-BPF.UN)

[Justise]

"Basically, I sold because I thought I saw better value elsewhere. The stock/trust gave me roughly a 50% return when the TSX was flat or down over the same interval. Outperformance, mathematically, cannot be perpetual, especially in a commoditized industry like restaurants."

This chart - http://tmx.quotemedia.com/charting.php? ... symbol=XDV - comparing BPF to XDV to TSX more or less confirm your claim giving results for capital gains for 5 yr as follows:

BPF 57%
XDV 19%
TSX 1%

This also confirms dividend paying growth stocks far outperform the TSX even excluding dividends. I believe BPF will continue to outperform substaintially in total returns.

[Justise]

Before making any forward projections for the consumer sector, consider this:



http://www.theeconomicanalyst.com/conte ... ehold-debt

Discretionary stocks – Canadian Tire, Cineplex, Tim Hortons – yesterday reported pretty good Q3 results joining BPF, Telus to name some that shine brightly even with the Canadian household debts to disposable income rising above those of US.

The US is having triple hit in assets in that:

1)The S&P 500 is having a lost decade in US dollar terms and even worst against a basket of currencies.
2)The severe tanking of both the residential properties and commercial properties.
3)The tanking of the US$.


Canada, OTHO, is having triple gains as the opposite.

The housing burst in US. UK and Spain are having very severe knock-on effects on their respective economies starting from around 2007.

But both Canada and Australia were and are still standing tall with respect to real estate, banks, and currency. And both relatively escaped the recent great recession.

What happens to the wealth from the peace premium and the productivity gains that far outshine Canada for years and years? What is missing in the maths?

Prime Restaurent is on buyout by Cara at 40% premium. BPF as a cash-cow will probably worth $18 to $19.

[Justise]

Surprise that Fairfax Financial is giving a higher bid by $1/share for Prime Restaurants than that of Cara. Why would a financial be interested in Restaurant royalties?

[Webber22]

With the yield over 8% I'm starting to allocate more to BPF.UN. The new stores in eastern Canada are doing well based on my visits.....

[Justise]

RBC Capital Markets seem to be stallking BPF.UN as evident possibly by serious purchases, yesterday and today at higher prices.

[Webber22]

RBC Capital Markets has pushed up the price over the past month - over $16 now - if anyone is watching level quotes. I think I'll take my profits now since this stock tends to fall during the spring/summer

[Justise]

RBC Capital Markets has pushed up the price over the past month - over $16 now - if anyone is watching level quotes. I think I'll take my profits now since this stock tends to fall during the spring/summer

There will be a dividend increase of about 9% from Q3 2012 almost the same as last year. The stock is up because BPF has resumed good SSSG trend with the last 3 quarters having strong SSSG of above 4%.

Pitz was taking profit on BPF and I think he probably is regreting it now. I am not selling because of the good yield with the good growth trend.

[max88]

It's a $20 stock again!!! All it takes is 1 share traded at this price. Last time over $20 is 2006.

(edit1: Added historical price context)
(edit2: Removed real time quote bid/ask prices and lot sizes)

[Webber22]

It's been a good ride up. Also hold PZA, yields over 7% now, with 100% eligible dividends since they converted to a corp earlier this year.

[jeremy]

It's a $20 stock!!! All it takes is 1 share traded at this price.

Nice run, but wasn't it a $20 stock in 2006?

[max88]

It's a $20 stock!!! All it takes is 1 share traded at this price.

Nice run, but wasn't it a $20 stock in 2006?

Thanks for bringing it up. It's added to the post.
I did not know/own this stock until 2008/2009. Got in when it was around $10, and have been collecting distributions.

[Justise]

It's a $20 stock!!! All it takes is 1 share traded at this price.

Nice run, but wasn't it a $20 stock in 2006?

Thanks for bringing it up. It's added to the post.
I did not know/own this stock until 2008/2009. Got in when it was around $10, and have been collecting distributions.

Congratulation for the good catch, max88. I update below the 5 year relative performances(from best to worst) of the some ransomly selected listed stocks against the TSX index and XDV using TMX charting for some implied inferences:

BPF +50%
THI +45%
BCE +24%
TD +21
TRP +21
XDV +5%
TSX -4%

I. Is it stock selection better or investing in index using ETF? For the above results, for your info, I did not cherry pick, but just randomly pick some popular dividend paying stocks and check against the dividend ETF, XDV, and the TSX except popular Tim Hortons THI for comparision also to BPF.

2. Randomly picked dividend payinng stocks,BCE,TRP,TD, average over +20% Vs. +5% for XDV (dividend ETF) Vs.-4% for TSX, is a flut or is good enough proof that stock selection is better for the savy investor?

3. Upthread, I compared BPF to THI, in total return, in PE, in SSSG, BPF beat THI on average over the 5 year period.

4. For those buying into BPF 5 years ago, average over 20% in total return per year in a low bond yield environment and beat TSX by a very far margin and also the XDV.

[Justise]

It's been a good ride up. Also hold PZA, yields over 7% now, with 100% eligible dividends since they converted to a corp earlier this year.

Webber 22, as for PZA, I copied and paste below my post under RPI.UN for illustration of PZA's 10yr performance compare to its peers and other relevant stocks.


"Mike, as I said under Boston Pizza Income Fund (BPF.UN) last post, I did not cherry pick, but just randomly selected TD, TRP, BCE as being pupular stocks. Since RPI.UN is an income trust and the attraction is largely the yield in the low interest rate environment, and therefore, it is fair to compare to some dividend paying stocks, the income trust index (^RTCM), XDV, and I added the restaurent royalties and Tim Hortons THI for comparisions with reasons. I now post the 10 yr past performances as on Feb 15, 2013 usin TMX charting and substite BNS for TD and I space them for a reason which I will explain.

AW.UN +113%
BPF.UN +104%
KEG.UN +58%
PZA +1%
Note: The above are restaurent royalties. Why PZA lags so badly by a huge margin? There must be a reason, right?

THI +44% (just for comparision to the restaurent royalties). For total returns, THI trails badly.

PEY +205% (one former O&G income trust)

^RTCM +95% (income trust index)

TRP +110% (pick one from pipelines)
BNS +130% (pick one from banks)
BCE +42% (pick one from telecoms)
Note: the above are dividend stocks.

XDV +10% (dividend index rep) Why this lags the above 3 sample divident stocks by a huge margin?

Finally RPI.UN -11%


For total returns, RPI.UN is near or at the bottom of the pack.


When you quoted PRIZM, PRIZM is an entirely different 'animal' from the restaurent royalties. Therefore, for those who understand income trusts, taxation, accounting, analysing financial year end results would not touch PRISM, and would likely also avoid PRI.UN. It has a negative of -11% since inception for some reasons. I think both you and Sensei didn't look under the 'hood' with DD."



I also own AW.UN and SRV.UN but not PZA. The 10yr and 5yr performance records reflect the short coming of PZA. I also don't own KEG.UN for almost similar reason.

[Justise]

I recently read the whole posts here and found that Adrain2 was investing in SRV.UN which is a small restaurant royalty income trust and seemed to be happy as an alternative and therefore I also took a closer look and started buying in. The yield is now around 8.6%.

I am projecting about 15% capital gain by Mar 2014 plus 8.6% yield. The projection is from past experience. AW.UN will likely have 10% capital gain by Mar 2014.

BPF.UN is having a good run for the past 1 year.

[zinfit]

I owned BPF.UN and AW.UN. I sold BPF and kept my AW. I figure AW is much more defensive. Its menu is affordable and the chain has a fairly loyal group of dedicated customers. I personally like their breakfast and I much prefer their coffee to Tim's. I believe that AW has the ability to add more outlets and they have been fairly good at increasing same stores sales. Both beat the yield on GICs and bonds.

[Justise]

I owned BPF.UN and AW.UN. I sold BPF and kept my AW. I figure AW is much more defensive. Its menu is affordable and the chain has a fairly loyal group of dedicated customers. I personally like their breakfast and I much prefer their coffee to Tim's. I believe that AW has the ability to add more outlets and they have been fairly good at increasing same stores sales. Both beat the yield on GICs and bonds.

Zinit,

Most people think that the more affordables like AW.UN, THI, PZA

are bettter bets than

the higher ends casual dinnings like BPF.UN, KEG.UN, SRV.UN

On the aggregate total, higher ends 3 casual dinnings beat the 3 more affordables in both capital gains and total returns. And if you use TMX 10yr charting, BPF has outperformed AW already.

[Shakespeare]

BPF is higher end???

[adrian2]

BPF is higher end???

It is higher than A&W, Tim Hortons and Pizza Pizza (chains mentioned by Justise).

[zinfit]

According to the tables provided by Justise AW topped the group with a 113% gain over the 10 year period. The Keg was 1/2 of that. I still figure it will hold up well in a slow economy. Its based solely on my personal experience with AW.

[Justise]

According to the tables provided by Justise AW topped the group with a 113% gain over the 10 year period. The Keg was 1/2 of that. I still figure it will hold up well in a slow economy. Its based solely on my personal experience with AW.

Let's look at the updates as of today, 21/3/2013, using TMX charting:


10 years -

BPF.UN 125%
AW.UN 115%
KEG.UN 60%


5 years -

BPF.UN 84%
AW.UN 64%
KEG.UN 41%
SRV.UN 34%

3 years -

BPF.UN 80%
AW.UN 37%
KEG.UN 25%
SRV.UN 30%

As I said, BPF has outperformed AW to the surprise of many who believe that the more affordable would be better.

Overall, both BPF & AW have very good managements and the 10 year results is supposedly indicative of that fact.

[Justise]

BPF is higher end???

It is higher than A&W, Tim Hortons and Pizza Pizza (chains mentioned by Justise).

Thanks for answering on my behalf. But sorry buddy, BPF beats SRV. However, I am now betting on SRV.UN with 8.6% yield and am also looking at better capital gain than AW.UN which will in turn have better capital gain than KEG.UN going forward from here for the next 1 to 2 years.

[Nortel'd]

My question is ...How will the automatic securities purchase plan ("ASPP") to allow for the repurchase of BPF.UN Fund units under a Normal Course Issuer Bid affect the price of this stock once all fund units have been repurchased for cancellation?

Am I right to think the price of this stock will drop once the BPF Fund issues the press release announcing all 1,442,522 Fund units have been repurchased for cancellation.

This Normal Course Issuer Bid permits the Fund to repurchase for cancellation up to 1,442,522 Fund 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 7,174 units, subject to the block purchase exception.

As at March 18, 2013, the Fund had not purchased any Fund units under its current Normal Course Issuer Bid.

On March 18, 2013 BPF.UN closed at $20.72 per unit and today it closed at $22.15.

I hold BPF.UN units in my NON RRSP margin account. I like the monthly dividend, my adjusted cost for each unit is $10.95 and I am basically a buy and hold investor. BUT BPF.UN’s most recent earnings and Payout Ratio are worry-some........
Analysis at TD Waterhouse
Per Share Data for BPF.UN
Earnings (TTM) $0.06
Book Value $10.61
Cash Flow (TTM) --
Price/Earnings 365.6x
Price/Sales (TTM) 10.9x
Price/Book (MRQ) 2.0x
Price/Cash Flow (TTM) --
Gross Margin --
Operating Margin 25.68%
Profit Margin 6.58%
Return on Assets 0.78%
Return on Equity 1.25%
Return on Investment 0.83%
Annual Dividend Rate 1.22
Dividend Yield 5.63%
Payout Ratio 842.8x
Debt to Capital 15.36%
Current Ratio 1.9x

[Webber22]

I believe their last financials stated a 100% payout ratio, which is the target ratio for most income funds

[Justise]

My question is ...How will the automatic securities purchase plan ("ASPP") to allow for the repurchase of BPF.UN Fund units under a Normal Course Issuer Bid affect the price of this stock once all fund units have been repurchased for cancellation?

Am I right to think the price of this stock will drop once the BPF Fund issues the press release announcing all 1,442,522 Fund units have been repurchased for cancellation.

This Normal Course Issuer Bid permits the Fund to repurchase for cancellation up to 1,442,522 Fund 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 7,174 units, subject to the block purchase exception.

As at March 18, 2013, the Fund had not purchased any Fund units under its current Normal Course Issuer Bid.

On March 18, 2013 BPF.UN closed at $20.72 per unit and today it closed at $22.15.

I hold BPF.UN units in my NON RRSP margin account. I like the monthly dividend, my adjusted cost for each unit is $10.95 and I am basically a buy and hold investor. BUT BPF.UN’s most recent earnings and Payout Ratio are worry-some........
Analysis at TD Waterhouse
Per Share Data for BPF.UN
Earnings (TTM) $0.06
Book Value $10.61
Cash Flow (TTM) --
Price/Earnings 365.6x
Price/Sales (TTM) 10.9x
Price/Book (MRQ) 2.0x
Price/Cash Flow (TTM) --
Gross Margin --
Operating Margin 25.68%
Profit Margin 6.58%
Return on Assets 0.78%
Return on Equity 1.25%
Return on Investment 0.83%
Annual Dividend Rate 1.22
Dividend Yield 5.63%
Payout Ratio 842.8x
Debt to Capital 15.36%
Current Ratio 1.9x

The analysts are all using computers to generate results without the human touch and most of what you gave are useless figures. Restaurant royalties are basically toll collectors as franchisers. BPF has 99years to collect the royalty fees with some 89 years remaining. Since there are no capex nor, mantainance costs to bear, management has no purpose to retain any cash generated from cash flow and therefore tries to give out payout ratio just below 100 pc or close to it. This generally has been the case with no exception to my knowledge memory.

As for share buy back, it is accretive and this is still a growth entity. and I suppose the practice is not materially different from others doing share buybacks.

With the baby boomers retiring, there is a great hunger for higher yield 'indexed' to inflation and BPF consistently outperformed the parameters over the past 11 years since IPOD in 2002.

Just sit back and enjoy the nice monthly dividend index better to inflation.

[Justise]

My question is ...How will the automatic securities purchase plan ("ASPP") to allow for the repurchase of BPF.UN Fund units under a Normal Course Issuer Bid affect the price of this stock once all fund units have been repurchased for cancellation?

Am I right to think the price of this stock will drop once the BPF Fund issues the press release announcing all 1,442,522 Fund units have been repurchased for cancellation.

This Normal Course Issuer Bid permits the Fund to repurchase for cancellation up to 1,442,522 Fund 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 7,174 units, subject to the block purchase exception.

As at March 18, 2013, the Fund had not purchased any Fund units under its current Normal Course Issuer Bid.

On March 18, 2013 BPF.UN closed at $20.72 per unit and today it closed at $22.15.

I hold BPF.UN units in my NON RRSP margin account. I like the monthly dividend, my adjusted cost for each unit is $10.95 and I am basically a buy and hold investor. BUT BPF.UN’s most recent earnings and Payout Ratio are worry-some........
Analysis at TD Waterhouse
Per Share Data for BPF.UN
Earnings (TTM) $0.06
Book Value $10.61
Cash Flow (TTM) --
Price/Earnings 365.6x
Price/Sales (TTM) 10.9x
Price/Book (MRQ) 2.0x
Price/Cash Flow (TTM) --
Gross Margin --
Operating Margin 25.68%
Profit Margin 6.58%
Return on Assets 0.78%
Return on Equity 1.25%
Return on Investment 0.83%
Annual Dividend Rate 1.22
Dividend Yield 5.63%
Payout Ratio 842.8x
Debt to Capital 15.36%
Current Ratio 1.9x

The analyst’s data provided are having many flaws notably:
a] Cash Flow (TTM) --
b] Price/Cash Flow (TTM) --

c] Payout Ratio 842.8x
Since they cannot get Cash Flow correct with no data (which is ridiculously lousy), Payout Ratio is perhaps just plugged from the air with whatever figure they like with a ridiculous figure of 842.8x.

And I don’t know where they get the following figures also:
Gross Margin --
Profit Margin 6.58%
Return on Equity 1.25%
Return on Investment 0.83%
Perhaps we cannot trust both the analyst and the computer.

For restaurant royalties, there are no capex and no maintenance costs to bear, therefore Free Cash Flows (FCF) are free for distributions to unit holders. Therefore, the important parameter to look for is Free Cash Flow Yield as a substitute to Earning Yield.

In fact FCF is one of the important parameters for all stock screenings.

BPF is going from strength to strength perhaps also because the Canada bond yields are now exceptionally low hovering around 1% for short bonds.