What To Know Before Buying Restaurant Brands International Inc (NYSE:QSR) For Its Dividend
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 4 years Restaurant Brands International Inc (NYSE:QSR) has returned an average of 2.00% per year to investors in the form of dividend payouts. Does Restaurant Brands International tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Restaurant Brands International
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Restaurant Brands International fare?
The company currently pays out 34.79% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 64.54%, leading to a dividend yield of 3.10%. However, EPS is forecasted to fall to $2.54 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 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 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Restaurant Brands International has a yield of 2.96%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, Restaurant Brands International is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, 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. Below, I’ve compiled three relevant 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.
To help readers see pass 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.
