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Your thoughts on royalty stocks

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Question asked 29/11/2025

Your thoughts on royalty stocks

Hi, Please forgive my asking questions 2 weeks in a row. I don't want to take advantage of your kindness. However, I recently read an article about royalty stocks that reminded me of their potential usefulness. Currently I own DRR and am doing well with it. However, as it is CURRENTLY solely into iron ore royalties it makes me mildly uncomfortable. Having said that, the the article I read made me think that there are many other resources that might be good to get into and there might be many more diverse royalty companies worth considering. I believe that resource stocks are about the most dangerous to own. They all cyclical and even during boom times can fluctuate violently. One has only to look at nickel and uranium as examples. Are there any royalty stocks paying high dividends that you would consider buying? There is always some risk when buying any stock but I prefer, in the current market, lower risks than higher risks for obvious reasons. Also, since I have your attention, what are your views on DRR which I already own? Thank you and keep up the great work, Paul

Answer

Hi Paul,

Deterra is one of the first scaled royalty companies on the ASX and provides a somewhat different risk profile to a typical miner: you get commodity exposure, but with fewer of the mining-operational risks, since you’re not operating the mine – a plus when we consider the minefield of operational misses that the ASX miners have delivered over recent years. However, royalty companies still depend on the performance of the underlying mines/projects: if production falls, or commodity prices fall, royalties drop.

In the case of DRR the stock is forecast to yield ~6.5% fully franked over the next 12-months which is obviously attractive.

However, DRR has fallen ~30% from its early 2024 high, underperforming BHP and RIO although it has fared better than Fortescue – investing is not always a perfect science! Moving forward, we would expect DRR to diversfy into other areas, something they have flagged in the past.

The ASX marketplace has fewer pure royalty/stream companies compared to Canada/US, so options are more limited. An interesting alternative is the BetaShares Global Royalties ETF (ROYL) which gives investors exposure to a diversified portfolio of ~50 global companies that earn income from royalties and streaming across resources, music, biotech, and technology. It targets steady monthly income with less operational risk than traditional operators, but still carries market, sector, and currency risks. For Wholesale Investors, the Regal Resources Royalities Fund is a a good one.

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Deterra Royalties (DRR)

LAST UPDATED 26/11/2025 12:26

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