Just Four Days Till Restaurant Brands International Limited Partnership (TSE:QSP.UN) Will Be Trading Ex-Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Restaurant Brands International Limited Partnership (TSE:QSP.UN) is about to go ex-dividend in just four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Restaurant Brands International Limited Partnership's shares before the 21st of March in order to be eligible for the dividend, which will be paid on the 5th of April.

The company's next dividend payment will be US$0.55 per share. Last year, in total, the company distributed US$2.20 to shareholders. Last year's total dividend payments show that Restaurant Brands International Limited Partnership has a trailing yield of 3.6% on the current share price of CA$83.91. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Restaurant Brands International Limited Partnership

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Restaurant Brands International Limited Partnership paid out 51% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Restaurant Brands International Limited Partnership generated enough free cash flow to afford its dividend. It paid out more than half (70%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Restaurant Brands International Limited Partnership paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Restaurant Brands International Limited Partnership earnings per share are up 8.7% per annum over the last five years. Decent historical earnings per share growth suggests Restaurant Brands International Limited Partnership has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Restaurant Brands International Limited Partnership has delivered 25% dividend growth per year on average over the past eight years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Is Restaurant Brands International Limited Partnership worth buying for its dividend? Earnings per share have been growing modestly and Restaurant Brands International Limited Partnership paid out a bit over half of its earnings and free cash flow last year. In summary, it's hard to get excited about Restaurant Brands International Limited Partnership from a dividend perspective.

However if you're still interested in Restaurant Brands International Limited Partnership as a potential investment, you should definitely consider some of the risks involved with Restaurant Brands International Limited Partnership. For example, we've found 4 warning signs for Restaurant Brands International Limited Partnership (3 are a bit unpleasant!) that deserve your attention before investing in the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.