Dine Brands Global, Inc. (NYSE:DIN) Passed Our Checks, And It's About To Pay A US$0.76 Dividend
Dine Brands Global, Inc. (NYSE:DIN) stock is about to trade ex-dividend in 4 days time. This means that investors who purchase shares on or after the 19th of March will not receive the dividend, which will be paid on the 3rd of April.
Dine Brands Global's next dividend payment will be US$0.76 per share, and in the last 12 months, the company paid a total of US$3.04 per share. Last year's total dividend payments show that Dine Brands Global has a trailing yield of 7.1% on the current share price of $42.68. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Dine Brands Global
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Dine Brands Global paid out a comfortable 46% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 35% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Dine Brands Global's earnings have been skyrocketing, up 25% per annum for the past five years. Dine Brands Global is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Dine Brands Global's dividend payments are broadly unchanged compared to where they were seven years ago.
To Sum It Up
Is Dine Brands Global an attractive dividend stock, or better left on the shelf? It's great that Dine Brands Global is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about Dine Brands Global, and we would prioritise taking a closer look at it.
In light of that, while Dine Brands Global has an appealing dividend, it's worth knowing the risks involved with this stock. For example, Dine Brands Global has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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