Only Three Days Left To Cash In On Restaurant Brands International Limited Partnership's (TSE:QSP.UN) Dividend

Readers hoping to buy Restaurant Brands International Limited Partnership (TSE:QSP.UN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 18th of December in order to be eligible for this dividend, which will be paid on the 5th of January.

Restaurant Brands International Limited Partnership's next dividend payment will be US$0.52 per share. Last year, in total, the company distributed US$2.08 to shareholders. Based on the last year's worth of payments, Restaurant Brands International Limited Partnership has a trailing yield of 3.5% on the current stock price of CA$76.83. If you buy this business for its dividend, you should have an idea of whether Restaurant Brands International Limited Partnership's dividend is reliable and sustainable. So we need to investigate whether Restaurant Brands International Limited Partnership can afford its dividend, and if the dividend could grow.

See our latest analysis for Restaurant Brands International Limited Partnership

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 87% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (87%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Restaurant Brands International Limited Partnership's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Restaurant Brands International Limited Partnership's earnings have been skyrocketing, up 26% per annum for the past five years. Earnings per share are growing at a rapid rate, yet the company is paying out more than three-quarters of its earnings.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Restaurant Brands International Limited Partnership has delivered 34% dividend growth per year on average over the past six years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is Restaurant Brands International Limited Partnership an attractive dividend stock, or better left on the shelf? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Restaurant Brands International Limited Partnership's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 87% and 87% respectively. To summarise, Restaurant Brands International Limited Partnership looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while Restaurant Brands International Limited Partnership has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that Restaurant Brands International Limited Partnership is showing 2 warning signs in our investment analysis, and 1 of those is a bit concerning...

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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