Hi everyone I recently sold one of my stocks Pizza Pizza Royalty Corp and I thought I would share that with you.
About Pizza Pizza
Pizza Pizza Royalty Corp. owns the trademarks and trade names used by Pizza Pizza Limited (PPL) in its Pizza Pizza and Pizza 73 restaurants. PPL operates its Pizza Pizza Restaurants as franchise oriented restaurants and Pizza 73 Restaurants are owned, and operated as independent businesses. It operates through receipt of royalty income from the ownership of the Pizza Pizza and Pizza 73 Rights and Marks segment. Pizza Pizza is a franchise-oriented restaurant business operating in the province of Ontario in which it dominates the pizza quick service restaurant (QSR) segment. Pizza Pizza Restaurants operate in Ontario, Quebec, Saskatchewan, Manitoba and Nova Scotia. There are approximately 100 Pizza 73 locations operating in the QSR segment, in the province of Alberta. Pizza 73 has over five traditional locations outside of Alberta; approximately three in Saskatchewan, and over two in British Columbia. The Pizza 73 business also includes over two central food distribution centers.
Source: RBC Direct Investing
Why did I sell? That is an excellent question! First off it wasn’t an easy decision as I have held Pizza Pizza Royalty Corp shares for years. But I have been keeping an eye on the stock the past few quarters and same store sales which is a key metric has been close to zero or starting to drop. A couple of weeks ago when they released their quarterly report sales were down a combined 3.3%, Pizza Pizza down 3.5% and Pizza 73 down 1.7%. Also the company has been hit by Ontario and Alberta raising their minimum wage. Another key reason I believe for declining sales is there are so many healthy alternatives now a days people maybe shying away from pizza.
The company currently has a 3 to 5 year plan to turn the business around but I didn’t want to wait that long to see if it works or not. Also the dividend payout ratio was over 100%. I think the dividend is safe for the time being but down the road if sales don’t improve it could potentially get cut.
On September 4th I sold all 242 shares of the stock, I sold the shares @$10. My average cost was $13.54 so I was down 25.79% or $845.06. That is not including dividends. I received a total of $760.98 in dividends from the company so I almost broke even.
With this sale I will lose an expected $208.12 in annual dividend income, but I will have peace of mind and I can help diversify my portfolio further with the funds from the sale.
So what do you think? Do you own this stock? Would you sell or possibly buy on the downturn? I look forward to hearing what you have to say.
Next Tuesday I will share with you what I purchased with the funds from the sale.
Thanks for reading