High Dividend 50: SIR Royalty Income Fund

High-yield stocks pay out dividends that are significantly higher than the market average. For example, the S&P 500’s current yield is only ~1.2%.

High-yield stocks can be particularly beneficial in supplementing income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.

SIR Royalty Income Fund (SIRZF) is part of our ‘High Dividend 50’ series, which covers the 50 highest-yielding stocks in the Sure Analysis Research Database.

We have created a spreadsheet of stocks (and closely related REITs, MLPs, etc.) with dividend yields of 5% or more.

You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:

Next on our list of high-dividend stocks to review is SIR Royalty Income Fund (SIRZF).

Business Overview

The SIR Royalty Income Fund is a Canadian income trust that earns a 6% royalty on sales from select restaurants operated by SIR Corp., including Jack Astor’s Bar & Grill, Scaddabush Italian Kitchen & Bar, and other upscale dining concepts. Income is received through the SIR Royalty Limited Partnership, which collects royalties from the “Royalty Pool”—a defined group of restaurants reviewed annually to reflect changes in performance and new openings. As of 2025, the pool includes four recently added restaurants, while some locations, such as the Jack Astor’s in Greenfield Park, have been removed.

The Fund provides consistent monthly distributions, currently $0.10 per unit, but its performance is directly tied to SIR Corp.’s restaurant sales. This exposes unitholders to risks from consumer spending trends, economic conditions, labor and supply costs, and overall operational performance of the underlying restaurant brands. Despite these risks, the Fund aims to deliver steady income through its royalty structure and disciplined management of the Royalty Pool.

SIR Royalty Income Fund reported Q2 2025 Pooled Revenue of $72.9 million, up 8.1% from Q2 2024, driven by four new restaurants and a 1.1% increase in same-store sales, led by Scaddabush’s 7% growth. Royalty income rose to $4.4 million, and equity income increased to $2.9 million. Net earnings were $3.5 million ($0.42 per basic unit), slightly below last year’s due to smaller SIR Loan valuation gains and higher taxes. Distributable cash totaled $2.5 million, with a payout ratio of 94.5%, in line with the Fund’s long-term target.

SIR strengthened its finances with a new $68 million credit agreement, replacing its previous $38.7 million facility, supporting growth and expansion. A new Scaddabush opened in Barrie, Ontario, while the Jack Astor’s in Greenfield Park permanently closed, to be removed from the Royalty Pool in 2026. Following a prior cybersecurity incident, SIR received $2.0 million in insurance proceeds, which will not impact Fund distributions. Monthly distributions were raised to $0.10 per unit, effective July 31.

Looking ahead, SIR is focused on growth and efficiency, opening new locations, investing in existing restaurants, and expanding take-out and delivery offerings. Management continues to monitor inflation, labor costs, and supply challenges, adjusting plans as needed to sustain revenue and distributions amid changing market conditions.

Growth Prospects

SIR Royalty Income Fund’s growth prospects are primarily tied to incremental expansion within its Royalty Pool. While the Fund has delivered steady distributable cash to unitholders, its earnings per share (EPS) history has been uneven.

The company recorded a significant EPS loss in 2020 due to a non-cash impairment on its restaurant brands following the pandemic-driven revenue decline. Subsequent partial reversals of this charge, combined with government assistance, led to outsized EPS in 2022 and 2023. Stripping out these one-off factors, the Fund’s core EPS has grown from $0.82 in 2015 to roughly $1 per share today, reflecting modest but steady operational growth.

Looking forward, SIR Royalty is expected to achieve approximately 2% annual EPS growth, largely driven by the addition of new restaurants to the Royalty Pool. Despite this, total Royalty Pool revenues in 2024 remained 15% below pre-pandemic levels, highlighting limited pricing power and sensitivity to consumer spending trends.

In July 2025, the Fund raised its monthly dividend by 5.2% to C$0.10 per unit ($1.20 annually, or about $0.87 USD), demonstrating confidence in the sustainability of distributions while continuing to pursue measured growth opportunities.

Competitive Advantages & Recession Performance

SIR Royalty Income Fund benefits from a stable royalty-based business model, earning a consistent 6% on sales from established restaurant brands such as Jack Astor’s and Scaddabush.

This model limits operational risk by having the Fund not manage day-to-day restaurant operations, thereby generating predictable cash flow. Its diversified Royalty Pool, regularly adjusted to include top-performing locations, provides a steady income stream and supports reliable monthly distributions to unitholders.

During economic downturns, SIR Royalty’s performance has shown resilience, though it is not immune to industry pressures. The Fund experienced a sharp EPS decline in 2020 due to pandemic-related restaurant closures, but quickly recovered with partial impairment reversals and government support.

Core earnings per share have since stabilized, and ongoing Royalty Pool expansions and disciplined financial management help maintain steady cash distributions even in softer economic conditions.

Dividend Analysis

SIR Royalty Income Fund maintains a consistent monthly dividend of CAD $0.10 per unit, which equates to C$1.20 annually or approximately USD $0.87 for U.S. investors. The Fund’s distributions are primarily funded through royalty income from SIR Corp.’s restaurant operations and interest income from the SIR Loan.

The dividend payout ratio is approximately 85% of earnings, reflecting a sustainable distribution level, though the cash payout ratio may exceed 100% in certain periods, highlighting the importance of ongoing operational performance and cash flow management.

With a yield well above the Canadian market average, SIR Royalty remains a high-yield income option, but its ability to maintain dividends depends on SIR Corp.’s operational success and the overall health of the restaurant industry.

Final Thoughts

SIR Royalty Income Fund offers attractive forward returns, estimated at 8.0% annually, driven mainly by its high dividend yield and modest EPS growth potential. However, risks include limited geographic presence, relatively modest brand strength, and challenging macroeconomic conditions in Canada. Following the recent dividend increase, the Fund’s outlook has improved, and we now assign a hold rating to SIRZF shares.

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