Shares of Restaurant Brands International Inc (NYSE:QSR) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.45 per share, investors must have owned the shares prior to 14 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Restaurant Brands International’s latest financial data to analyse its dividend attributes. View our latest analysis for Restaurant Brands International
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Restaurant Brands International fit our criteria?The current trailing twelve-month payout ratio for the stock is 34.79%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 56.52%, leading to a dividend yield of around 3.40%. However, EPS is forecasted to fall to $2.58 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider Restaurant Brands International as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Restaurant Brands International has a yield of 3.23%, which is high for Hospitality stocks but still below the market’s top dividend payers.
If you are building an income portfolio, then Restaurant Brands International is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for QSR’s future growth? Take a look at our free research report of analyst consensus for QSR’s outlook.
- Valuation: What is QSR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether QSR is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.