Restaurant Brands International (NYSE:QSR) Is Increasing Its Dividend To $0.58

The board of Restaurant Brands International Inc. (NYSE:QSR) has announced that it will be paying its dividend of $0.58 on the 4th of April, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 3.0%, providing a nice boost to shareholder returns.

Check out our latest analysis for Restaurant Brands International

Restaurant Brands International's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite comfortably covered by Restaurant Brands International's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Over the next year, EPS is forecast to expand by 41.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 50% by next year, which is in a pretty sustainable range.

Restaurant Brands International Is Still Building Its Track Record

Restaurant Brands International's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. 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. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Restaurant Brands International Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Restaurant Brands International has grown earnings per share at 9.1% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

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. While Restaurant Brands International is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Restaurant Brands International is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 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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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.