It Pays to Have a Frosty Mug

By • October 11, 2016

A&W Revenue Royalties Income Fund (TSX: AW-U, OTC: AWRRF) is one of the top fast-food outlets in Canada and has built a strong track record of profitable growth over the past 20 years.

The company’s strategy to focus on healthier ingredients since 2013 is also supporting solid growth in same-store sales and revenues.

In addition, the royalty model of the fund helps reduces the volatility of the income stream. The dividend yield is 4.7% and when coupled with moderate growth provides an attractive alternative to fixed-income securities.

The unit price has moved up strongly over the past few weeks, but we believe that it still offers good value. However, we advise investors to take an incremental approach when building a full position. Buy A&W below C$35, or US$26.50.

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CPIANO

10/13/16 ‐ 3:58pm ET October 13, 2016 at 3:58pm ET

Please tell us the tax implications for US buyers of A & W revenue royalties income fund.
IE is a K1 rerquired? Thank you

Deon Vernooy

10/17/16 ‐ 5:39pm ET October 17, 2016 at 5:39pm ET

Hi, please refer to the Cross Border Tax Guide listed under the Resources tab on the Canadian Edge website. I am also checking with the company for any additional tax information.

Regards Deon

Robert Shatilla

10/17/16 ‐ 1:16pm ET October 17, 2016 at 1:16pm ET

Why do you prefer Power Corp. over PWF?

Deon Vernooy

10/17/16 ‐ 9:25pm ET October 17, 2016 at 9:25pm ET

Hi Robert, POW is the controlling entity of PWF. Apart from the PWF shareholding it also owns various other relatively small investments (including Sagard Funds, Power Energy, Square Victoria Communications). PWF makes up over 80% of the net asset value of POW but POW trades at a substantial discount of around 20% to its net asset value. So by investing in POW, you get a full investment in PWF at market value and a bunch of smaller investments, valued at about C$7bn, for free.

However, the share prices tend to move in tandem over time and the dividend yield on PWF (5.1%) is slightly higher than POW (4.7%). Income investors may prefer the higher yield but to my mind the 4.7% yield combined with the 20% discount is the better proposition.

Deon

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