RE Royalties: When Will the Revaluation Happen?
The energy transition is considered one of the biggest investment trends of the coming decades. Not only project developers and plant manufacturers benefit from this development, but other market participants as well. RE Royalties has yet to receive much attention.
As pioneers, the Canadians have introduced the royalty model, which has been successful in many industries, to the renewable energy sector. Based on this innovative financing model, the company provides capital to companies and, in return, receives long-term stakes in the revenue or earnings of the respective plants.
Its scalability makes the business model highly attractive. Shareholders benefit from an annual dividend payout of CAD 0.04, corresponding to a yield of over 10%. The company currently holds 121 licensing agreements for projects in the fields of solar, wind, hydro, battery storage, energy efficiency, and renewable natural gas in North America, South America, and Asia.
In addition, the project pipeline is robust, with letters of intent totaling approximately CAD 20 million. Furthermore, the Canadian company is evaluating investments exceeding CAD 200 million. Despite this potential and strong business performance, the company is currently valued at just under CAD 16 million, with a share price of about CAD 0.365.
This significant discrepancy has prompted management to take a landmark step in recent months. Together with an experienced capital markets partner, the Canadian company launched an analysis to evaluate options to increase its value. The process is open-ended. On the agenda are a possible sale of the company as well as measures to optimize the capital structure through equity or debt financing.
Lang & Schwarz: Significant Share Price Drop – What Now?
The company recently shocked the market with a revision to its annual forecast. The stock suffered massive losses. The reason for this is the decision by key customer Trade Republic to redistribute order flow differently in the future. This has a massive impact on net trading income. The company speaks of “a slight, or at most moderate, decline in net trading income compared to the previous year.” Profit from trading activities in 2026 will still be higher than the trading profit from 2024.
Most recently, as the second-quarter figures show, significant year-over-year increases were achieved. The company is taking decisive strategic action to counter this trend and plans to implement an additional trading model involving several well-known investment firms.
While the partnership with the neobroker Trade Republic is an important growth driver, the market-making business is significantly more broadly positioned. Investors should bear in mind the strong position of the Wikifolio business segment. The Düsseldorf-based company is both the issuer and market maker for all investable Wikifolio certificates.
From a timing perspective as well, the stock is now attractive at prices around EUR 18. The annual shareholders’ meeting is scheduled for August 26. An invitation with a dividend proposal has not yet been published. At the beginning of the year, however, the company floated the idea of a EUR 2 per share dividend. Following the recent price drop, this corresponds to a generous yield of 11%.
DWS: Growth Plus a Special Dividend?
With assets under management of EUR 1,093 billion, DWS is one of Europe’s largest asset managers. Its business model is highly scalable. Rising assets under management lead to higher commission income, while costs grow at a significantly slower rate. This results in high margins, strong cash flows, and attractive dividends as part of a shareholder-friendly dividend policy.
The company is benefiting from several growth trends. In addition to inflows into active funds, the Xtrackers ETF platform is also experiencing dynamic growth. DWS is thus benefiting from the boom in passive investments. Added to this is rising demand for alternative investments.
Based on these sustained, long-term trends, management raised its medium-term targets at the beginning of the year. By 2028, earnings per share are expected to grow by 10 to 15% annually. At the same time, costs are expected to decline, and long-term net inflows are projected to exceed EUR 160 billion between 2026 and 2028. Shareholders also benefit from a high payout ratio of around 65%. Most recently, EUR 3 was distributed to investors, corresponding to a yield of over 4%.
A special dividend is in store for next year. DWS has indicated that it plans to allocate a substantial portion of its current surplus capital, currently totaling around EUR 1 billion, for this purpose. Market estimates for the special dividend range between EUR 1.50 and EUR 3. This means that, based on the current share price, a dividend yield of up to 10% could be in store next year!
RE Royalties, Lang & Schwarz, and DWS combine high dividends with the prospect of rising profits and long-term price potential. This is a rare combination. RE Royalties, in particular, stands out thanks to the potential of its highly scalable royalty model in structurally growing markets. Investors gain access to a globally diversified portfolio spanning various sectors of green energy.
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