Why Burger King maintained dividend in 3Q14
Why Burger King's 3Q14 earnings were positive (Part 9 of 11)
Dividend payout
Burger King Worldwide (BKW) generated $399 million in free cash flows during 3Q14. The company’s cash balance increased to over $1 billion during the quarter. The company also paid $57 million in debt. BKW paid $77 million in total dividends to its shareholders.
Quarterly dividends
The company maintained its quarterly dividends at $0.08. Over the past eight quarters, the company increased its dividend by almost double. It was $0.04 in 3Q12. This indicates that Burger King may increase its dividends in the near future. Dividends are supported by the company’s ability to generate sufficient cash flows over the quarters.
Not the best dividend yield
If we analyze Burger King’s competitors, McDonald’s had the highest dividend yield of 3.41%. It was followed by Yum! Brands (YUM). YUM had a dividend yield of 2.6%. Wendy’s (WEN) had a yield of 2.4%. Tim Hortons (THI) had a yield of 1.3%. Domino’s (DPZ) had a yield of 1.05%. Jack in the Box (JACK) had the lowest dividend yield of 0.28%.
The Consumer Discretionary Select Sector SPDR Fund (XLY) holds restaurant stocks. It also pays dividends. This exchange-traded fund (or ETF) had a yield of 1.3% as of November 2014.
McDonald’s (MCD) is a little different than its competitors . At the end of 2013, it had ~$40 billion assets in property. This generates a steady rental income and cash flow. The revenue is used to pay dividends to shareholders. Read “Why McDonald’s may be a REIT stock” to learn more.
In the next part of the series, we’ll see how investors reacted after the earnings were released.
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