Arcos Dorados Holdings Inc's Dividend Analysis
Exploring the Sustainability and Prospects of ARCO's Dividends
Arcos Dorados Holdings Inc (NYSE:ARCO) recently announced a dividend of $0.06 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Arcos Dorados Holdings Inc's dividend performance and assess its sustainability.
What Does Arcos Dorados Holdings Inc Do?
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Arcos Dorados Holdings Inc operates McDonald's-branded restaurants in approximately 20 countries and territories in Latin America and the Caribbean. It functions through two segments which include company-operated restaurants and franchised restaurants. Their menu features a variety of items such as hamburgers, McNuggets, salads, sandwiches, and french fries, catering to diverse tastes and preferences.
A Glimpse at Arcos Dorados Holdings Inc's Dividend History
Arcos Dorados Holdings Inc has maintained a consistent dividend payment record since 2022, distributing dividends on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Arcos Dorados Holdings Inc's Dividend Yield and Growth
Arcos Dorados Holdings Inc currently has a 12-month trailing dividend yield of 1.71% and a 12-month forward dividend yield of 2.14%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Arcos Dorados Holdings Inc's annual dividend growth rate was 11.90%. Based on the dividend yield and five-year growth rate, the 5-year yield on cost of Arcos Dorados Holdings Inc stock as of today is approximately 1.71%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Arcos Dorados Holdings Inc's dividend payout ratio is 0.21.
Arcos Dorados Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Arcos Dorados Holdings Inc's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Arcos Dorados Holdings Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Arcos Dorados Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Arcos Dorados Holdings Inc's revenue has increased by approximately 6.40% per year on average, a rate that outperforms approximately 60.62% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Arcos Dorados Holdings Inc's earnings increased by approximately 24.60% per year on average, a rate that outperforms approximately 64.55% of global competitors.
Next Steps
In conclusion, Arcos Dorados Holdings Inc's upcoming dividend payment, consistent dividend history, and promising growth rate are all indicative of its commitment to shareholder returns. The company's prudent payout ratio and fair profitability suggest that its dividend payments are sustainable. The growth metrics also provide a positive outlook for future dividend sustainability and potential increases. Investors considering Arcos Dorados Holdings Inc for its dividend prospects should also take note of the broader industry trends, regulatory factors, and the company's strategic initiatives, which could influence its future performance. Will Arcos Dorados Holdings Inc continue its trajectory of rewarding investors with growing dividends? Only time will tell, but current indicators provide a solid foundation for optimism.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
