Darden Restaurants Inc (NYSE:DRI): 4 Days To Buy Before The Ex-Dividend Date
If you are interested in cashing in on Darden Restaurants Inc’s (NYSE:DRI) upcoming dividend of US$0.75 per share, you only have 4 days left to buy the shares before its ex-dividend date, 09 October 2018, in time for dividends payable on the 01 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Darden Restaurants’s latest financial data to analyse its dividend attributes.
See our latest analysis for Darden Restaurants
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Darden Restaurants fit our criteria?
The company currently pays out 50% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect DRI’s payout to remain around the same level at 54% of its earnings, which leads to a dividend yield of 3.0%. Moreover, EPS should increase to $5.78.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. DRI has increased its DPS from $0.80 to $3 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes DRI a true dividend rockstar.
Compared to its peers, Darden Restaurants has a yield of 2.8%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Darden Restaurants as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for DRI’s future growth? Take a look at our free research report of analyst consensus for DRI’s outlook.
Valuation: What is DRI 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 DRI is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
