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Lots to like about this company, IMO.
The Royalty concept has been great in Canada for Mining, and this is already generating long term cashflow based on revenues which seems to be a smart way to benefit.
Companies that Duke invests in are well established and good at what they do. I look forward to further diversification to defend against potential shocks. Duke has so far been very well funded by institutions to allow its rapid growth.
The increasing chunky dividend looks very sustainable with increasing profits expected.
I think the market is eventually going to re-rate this stock, but with a 6% dividend yield, this is not a real concern for now.
One of the best things about the Royalty model is that if there were tough times in the market then Overheads are much lower than typical companies due to the low amount of staff required for this type of venture.
If you look at the Royalty sector in Canada for Mining related ventures such as Franko Nevada and Wheaton Precious Metals as two of the very best, it shows the massive returns that can be accumulated by means of Royalty/Streaming over a period of many years.
There are many more successful Canadian (TSX) royalty companies at different stages which gives further validation.
Finally, I did once had a dog called Duke. I do not expect to have a 2nd dog called Duke.
I agree, these types of awards should be struck at current share price when issued - then they would be putting their money where their mouths are. (They are after all already paid a salary to do the job).
To often they say to 'align the Directors interests in line with the company' - I would be very 'aligned' if you gave me a wad of free shares as well.
Shame, as I really like the company.
I worked for Segro once, where they re aligned the awards when the property market fell and they realised they wouldn't reach the targets - and had the cheek to say this was re alignment to reflect current market conditions i.e. make sure still very easy to reach !
Not surprised the share price does not react very much. To kill whatever good news there was in the half year figures, of course they had to publish their periodic director greed awards ("DGA").
Instead of giving share options with a strike price, say, 25% above current share price (to actually make them work effectively) they just give themselves shares for free.
Yes, they are apparently based on some obscure performance conditions, (half based on growth in total shareholder return ("TSR") and the other half on growth in total cash available for distribution per share ("TCAD per Share"). But the admission document SAYS NOTHING that I could find when I looked about what the GROWTH RATE actually has to be for all of these shares to be released, nor what the actual level of CASH AVAILABLE FOR DISTRIBUTION has be.
So we can safely assume that MAXIMUM AWARD will be made to all of the directors whatever the performance above some easy world index, once they have patiently sat and sat and waited for the vesting period.
Massive increase in profit and free cash. Dividend increased again. BUT share price only up a little........
Happy to be invested here though
I see Simon Thompson has again strongly recommended Duke Royalty. He expects pre-tax profits to double this year to £6.2m with the new agreements being signed from the recent funding. For March 2021 he expects cash flow to increase to £15.2m or 5.46p per share to support a dividend of 4p for a yield of 9%. He has a target price of 55p which I think on these figures is very modest.
Quite so, and theoretically 44p should be a support level, so don't know why price sometimes goes below - but if nimble enough to buy below, well done & it does feel satisfactory getting in ahead the institutions...
Just topped up at 43.8p and so will ignore any offer I eventually get. The problem I have found with applying for excess shares is that it can take up to a month to get my cash back if my application is restricted. Hopefully the share price has found its floor now. Best wishes.
Yes I see your point, but I understand you will be able to put in for any excess amount you wish (granted not guaranteed to get).
All in all however by pulling the price down for everybody - institutions & small shareholders you can effectively get in around the same price.
i.e. currently you can buy at 45p on a current rate of 3p divi it's 6.67% - it would be 6.8% at 44p.
The lesson as you indicate is that this is a dividend share - not a price flyer. It's already happened twice before with equity raises and year highs & lows are virtually the same for each of the last 3 years now!
Similar thing happened for me at Warehouse REIT - where I ended up buying more shares at a cheaper price in the market than the offer - swings & roundabouts - but for once I felt I was better off than the institutions (small comfort) !!
All true, but by tagging in existing shareholders after the main event, there is little incentive to take part, especially at (without checking) 2 new shares for 51 held ? Not that I have actually received the offer yet.
Like property REIT's this will likely be an ongoing issue here - it pays out nearly all of it's profits, so the only way to get money for new investments is issuing more shares. To do that successfully it has to offer a discount = this may happen several times - 2 steps forward 1 back.
It's a choice of good dividend or good share price growth.
At least they are currently still offering to small shareholders, unlike many other companies.
How to crash the price before making an offer available to loyal shareholders.
Excellent results this morning - good dividend - looks to be a long term hold for me
Agree with all thoughts on DUKE, and good to see the guys behind the company. I now only invest in quarterly dividend payers, they keep my interest better, and I have also doubled my investment in Duke this week. The trouble with a lot of quarterly payers like London Metric and Tritax BB is that as the price rises and the companies become more established, the yield doesn't follow suit. VSL/VPC are another company who I think are going places, their dividends are outstanding.
Thank you for that. Very low key explanation of what Duke do. I think this is a tremendous & unique investment with a fantastic historic, present & future track record, with an excellent dividend yield. I am amazed they are the same price I bought them at 15 months ago. I think & hope that the results on September 9th will show their great growth. I like the comment that many of their future royalty projects are in late stage negotiation & they have the funds to complete these.
Simon Thompson of the Investors Chronicle is a keen follower of this share. I think in time as it grows, it will come to the market's attention & will get a premium rating as they have a unique business model. I have more than doubled my holding in the past 12 months so it represents nearly 25% of my total portfolio, so am hoping my optimism holds good.
So this caused the shareprice to rise suddenly to 54.90p......
24-Jul-19 15:24:25 54.90 -87,509 Buy* 45.60 46.00 -48.04k
There is a matching trade at a correct price
24-Jul-19 15:24:25 54.90 87,509 Buy* 45.60 46.00 48.04k
Someone with "fat fingers"?
Here's DUKE CEO Neil Johnson, interviewed by James Lynch, Downing Fund Manager.
Downing bought into DUKE in the placing in 2018.
James elicits the key investment attractions of DUKE. Neil gives a great overview of DUKE, royalty finance, the market place, risk management and much more, to answer all the questions investors may have.
An excellent interview.
see cube hxxxs://cube.investments/cube-podcast-13-neil-johnson-duke-royalty-duke/
Note I am a holder so DYOR
Their business model is pretty much as follows:
1. Raise money in the market;
2. Invest money in royalties;
3. Raise dividend;
4. Watch share price rise to contain yield;
5. Raise more money in the market (at a higher price given share price increase, therefore reduced dilution per £ raised)
6. Repeat as long as they can find suitable things to invest in...
Given the size of the US Royalty market, and the fact DUKE is first mover in Europe, there is a very long way to go before this train stops moving. This share is pure gold - rising dividends and capital growth.
I love the quote in the most recent RNS about raising the dividend once this new tranche of money is invested; think it says something about "approaching double digit yield". If you assume they're basing that on placing price of 44p, they're talking about hitting an annual dividend of probably 4p within 12m. The current dividend is 2.8p. If the share price reacts to contain yield to even 6%, a 4p annual dividend would equate to a share price of 66p.
What can go wrong? They are diversifying (geographically and by segments they invest in); so as they grow any risks reduce, but if one of their investee companies fails, they'd lose a proportion of their income; and if there's a recession or other event affecting multiple companies, their income may suffer too.
I love this share, I am heavily invested, and likely to buy more on any dips, but as always, DYOR!
anyone any ideas of what should be future growth rate for this company .i think it could be a good long term buy as they pay dividends and share price is growing very slowly but steadily .,but im still not sure about them .
with experience in this type of financing. Been looking at this company since reading an article in the Daily Mail. This seems unique to North America and has been slightly restructured for the Europeans. The yield is currently 6% or thereabouts and their 'partners' seem to be well established businesses going through a period of growth.
Dilution is obviously the downside but the cash raised goes back into the business with additional partner(s)
Free float is small which should prevent the usual wild sp fluctuations and MC increase potential going forward.
Seems quite a niche market for now....
Jim Armitage has put this up as a buy. Very interesting model indeed.
Duke Royalty Limited (AIM: DUKE), the royalty financing company, is pleased to announce a proposed conditional placing and subscription ("Fundraising") to raise at least �20 million, before expenses, by way of a Placing of New Shares at a price of 40 pence per share (the Issue Price) and a Subscription by certain overseas investors on the same terms. The net proceeds of the Fundraising will allow the Company, inter alia, to continue to finance its diversified pipeline of royalty financing opportunities.
� Proposed Placing and Subscription to raise gross proceeds of at least �20 million
� Net proceeds to diversify portfolio of royalty investments and provide working capital
� Two new potential royalty partners in advanced stages of negotiation
� Additional proceeds to execute on new identified opportunities and/or follow on investments in existing royalty partners
� Following deployment of capital, Duke could have exposure to up to 6 underlying companies through four Royalty Partners
� Increased dividend yield expected following deployment of capital
� Issue price of 40p per share"
Excellent news, fundraising at minimal discount, targets for investment at very advanced stages of negotiation, returning >13% yield, and an expected dividend hike once completed. Not quite as I'd anticipated but very happy with this all the same.
Hope others join the party soon!
So, off the back of their first royalty deal DUKE announced a dividend of 2p per quarter: that's dividend payments of �900k pa from annual royalty income of c. �950k. A little bit stretched perhaps, but since then they have announced further deals with Lynx which are estimated to bring in another �840k pa.
They have tied up all their original investment capital, they have a strong pipeline of opportunities and will be looking to raise more capital quite soon. The DUKE model is as follows:
invest capital in royalty deals
share price appreciates because of increased dividend
raise more capital at higher share price
rinse and repeat...
Having invested all their available capital, and having a dividend that's now I estimate just under c. 2x covered by income, I am expecting DUKE's next move to be the announcement of an increased quarterly dividend. Based on last dividend announcement having been towards the end of September, I think we will see this land just before Christmas. How much they will increase the dividend by is anyone's guess, but here are some indicators of what it could do:
0.5ppspq (current div) gives yield of 4.8% at current share price of 42p
0.6ppspq = 5.7% yield (or 4.8% yield at a share price of 50p)
0.7ppspq = 6.7% yield (or 4.8% yield at a share price of 58p)
So here is a share with both income and capital growth potential. I am very happy to have found this still on the ground floor, and I will be adding as and when I can.
DYOR, GLA and hope to see some other investors on this board in due course!