Updated on May 7th, 2025 by Felix Martinez
SIR Royalty Income Fund (SIRZF) has two appealing investment characteristics:
#1: It is a high-yield stock based on its 8.9% dividend yield.
#2: It pays dividends monthly instead of quarterly.
Related: List of monthly dividend stocks
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Thanks to its high yield and monthly dividend payments, SIR Royalty Income Fund has the potential to be an excellent income investment.
Business Overview
SIR Royalty Income Fund is a Canadian income trust that generates revenue through a 6% royalty on the sales of select restaurants operated by SIR Corp. These include recognizable brands such as Jack Astor’s Bar and Grill, Scaddabush Italian Kitchen & Bar, and several upscale dining establishments across Canada.
The Fund does not directly manage restaurant operations. Instead, it earns income via the SIR Royalty Limited Partnership, which collects royalties from a defined group of restaurants known as the Royalty Pool. This pool is adjusted annually to reflect changes in performance and the number of included locations.
Although the Fund offers reliable monthly distributions to unitholders, its financial performance is closely tied to SIR Corp.’s restaurant sales. As a result, it is exposed to risks related to consumer spending trends, economic cycles, and SIR Corp.’s operational success.
Source: Investor Presentation
SIR Royalty Income Fund reported that SIR Corp.’s Q2 2025 revenue rose 10.4% year-over-year to $65.5 million, supported by stronger same-store sales and new restaurant openings. Four restaurants were added to the Royalty Pool, while one underperforming Jack Astor’s location was removed.
Same-store sales grew 3.7%, led by Scaddabush at 9.3%. Net loss narrowed to $1.6 million from $2.3 million last year, and adjusted net earnings rose to $1.7 million from $0.6 million. SIR had $2.4 million in cash and nearly maxed out its $39 million credit facility.
Looking ahead, SIR is managing inflation, wage pressures, and supply costs while growing takeout and dine-in services. Two new Scaddabush locations are planned, and the company is pursuing an insurance claim related to a 2024 cybersecurity incident.
Growth Prospects
SIR Royalty Income Fund’s growth is closely tied to SIR Corp.’s ability to expand its restaurant network and improve existing operations. In 2024, SIR added four new locations—including three Scaddabush restaurants and Edna + Vita in Toronto—which were added to the Royalty Pool in early 2025. These additions are expected to boost royalty income and broaden the Fund’s revenue base.
SIR plans to open two more Scaddabush locations in Barrie and Oshawa, while continuing to invest in its current restaurants. By the end of 2024, SIR had completed renovations at 13 locations, including several Jack Astor’s and Reds Square One. These upgrades are designed to modernize the dining experience, increase guest traffic, and enhance long-term sales performance.
Despite challenges like inflation and rising labor costs, SIR remains focused on innovation and flexibility. The company is strengthening its takeout and delivery offerings and improving dine-in service. In addition, recent credit agreement amendments provide more financial leeway, allowing SIR to continue investing in growth while navigating economic uncertainty.
Source: Investor Presentation
Dividend Analysis
The company maintains a consistent monthly dividend policy, distributing USD $0.070 per unit. This results in an annualized payout of approximately USD0.84 per unit, yielding around 8.9%. The Fund’s distributions are primarily funded through royalty income from SIR Corp.’s restaurant operations and interest income from the SIR Loan.
The Fund’s dividend payout ratio stands at approximately 79% of earnings, indicating a sustainable distribution level. However, the cash payout ratio exceeds 100%, suggesting that the Fund may distribute more cash than it generates. This highlights the importance of ongoing operational performance and efficient cash flow management to maintain dividend stability.
SIR Royalty Income Fund’s dividend yield is notably higher than the Canadian market average, placing it among the top quartile of dividend-paying entities. The Fund’s ability to sustain its dividend is closely tied to SIR Corp.’s operational success and the overall health of the restaurant industry. Investors should monitor these factors to assess the potential for continued dividend payments.
Final Thoughts
SIR Royalty Income Fund offers a strong dividend yield of around 8.9%, supported by a diverse portfolio of established restaurant brands. With ongoing expansion and renovations, SIR Corp.’s efforts to grow and modernize its restaurant network could drive future revenue and dividend sustainability.
However, the Fund’s cash payout ratio exceeding 100% raises concerns about its ability to maintain high payouts if SIR Corp. faces financial or operational challenges. Economic factors like inflation and rising costs could also impact profitability.
The Fund appeals to income-focused investors, but its sustainability depends on SIR Corp.’s performance and broader economic conditions. Investors should monitor these factors before committing.
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