Restaurant Brands International (NYSE:QSR) Has Announced A Dividend Of $0.58

Restaurant Brands International Inc.'s (NYSE:QSR) investors are due to receive a payment of $0.58 per share on 5th of July. This will take the dividend yield to an attractive 3.4%, providing a nice boost to shareholder returns.

See our latest analysis for Restaurant Brands International

Restaurant Brands International's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Restaurant Brands International was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. The business is earning enough to make the dividend feasible, but the cash payout ratio of 84% indicates it is more focused on returning cash to shareholders than growing the business.

The next year is set to see EPS grow by 15.9%. If the dividend continues on this path, the payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

Restaurant Brands International Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2015, the annual payment back then was $0.36, compared to the most recent full-year payment of $2.32. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Restaurant Brands International has been growing its earnings per share at 10% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Our Thoughts On Restaurant Brands International's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Restaurant Brands International's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Restaurant Brands International has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Restaurant Brands International (1 is a bit concerning!) that you should be aware of before investing. Is Restaurant Brands International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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