- United States
Restaurant Brands International Inc. (NYSE:QSR) Is About To Go Ex-Dividend, And It Pays A 3.6% Yield
Restaurant Brands International Inc. (NYSE:QSR) stock is about to trade ex-dividend in four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Restaurant Brands International investors that purchase the stock on or after the 21st of March will not receive the dividend, which will be paid on the 5th of April.
The company's upcoming dividend is US$0.55 a share, following on from the last 12 months, when the company distributed a total of US$2.20 per share to shareholders. Looking at the last 12 months of distributions, Restaurant Brands International has a trailing yield of approximately 3.6% on its current stock price of $61.73. 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! So we need to investigate whether Restaurant Brands International can afford its dividend, and if the dividend could grow.
View our latest analysis for Restaurant Brands International
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 is paying out an acceptable 66% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Restaurant Brands International generated enough free cash flow to afford its dividend. Over the last year it paid out 70% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that Restaurant Brands International'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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Restaurant Brands International earnings per share are up 4.2% per annum over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Restaurant Brands International 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.
To Sum It Up
Is Restaurant Brands International an attractive dividend stock, or better left on the shelf? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. All things considered, we are not particularly enthused about Restaurant Brands International from a dividend perspective.
With that being said, if dividends aren't your biggest concern with Restaurant Brands International, you should know about the other risks facing this business. To help with this, we've discovered 3 warning signs for Restaurant Brands International (1 is a bit concerning!) that you ought to be aware of before buying the shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Valuation is complex, but we're helping make it simple.
Find out whether Restaurant Brands International is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
Restaurant Brands International
Restaurant Brands International Inc. operates as a quick-service restaurant company in Canada, the United States, and internationally.
Solid track record and fair value.