Restaurant Brands International LP's Dividend Analysis
Assessing the Sustainability of Upcoming Dividend Payments
Restaurant Brands International LP (RSTRF) recently announced a dividend of $0.55 per share, payable on 2024-01-04, with the ex-dividend date set for 2023-12-20. 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 Restaurant Brands International LP's dividend performance and assess its sustainability.
What Does Restaurant Brands International LP Do?
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Restaurant Brands International LP is a Canada-based firm. It owns, operates and franchises quick-service restaurants and possesses market recognition. It operates in three segments namely; Tim Hortons; Burger King; and Popeyes Louisiana Kitchen. Its business generates revenue from franchise revenues; property revenues from properties it leases or subleases to franchisees; and sales at restaurants owned by the company. In addition, the Tim Hortons business generates a vast majority of the revenue from sales to franchisees related to its supply chain operations, including manufacturing, procurement, warehousing, and distribution, as well as sales to retailers.
A Glimpse at Restaurant Brands International LP's Dividend History
Restaurant Brands International LP has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Restaurant Brands International LP's Dividend Yield and Growth
As of today, Restaurant Brands International LP currently has a 12-month trailing dividend yield of 3.03% and a 12-month forward dividend yield of 3.04%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Restaurant Brands International LP's annual dividend growth rate was 3.70%. Extended to a five-year horizon, this rate increased to 17.90% per year. Based on Restaurant Brands International LP's dividend yield and five-year growth rate, the 5-year yield on cost of Restaurant Brands International LP stock as of today is approximately 6.90%.
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, Restaurant Brands International LP's dividend payout ratio is 0.78, which may suggest that the company's dividend may not be sustainable.
Restaurant Brands International LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Restaurant Brands International LP's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 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. Restaurant Brands International LP's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Restaurant Brands International LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Restaurant Brands International LP's revenue has increased by approximately 11.10% per year on average, a rate that outperforms approximately 81.04% 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, Restaurant Brands International LP's earnings increased by approximately 12.50% per year on average, a rate that outperforms approximately 60.09% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.50%, which outperforms approximately 49.53% of global competitors.
Next Steps
In conclusion, while Restaurant Brands International LP's upcoming dividend payment is anticipated by investors, it's essential to consider the company's dividend history, growth, and sustainability indicators. The consistent dividend payments, respectable yield, and growth rates present a compelling case for income-focused investors. However, the payout ratio warrants careful monitoring to ensure long-term sustainability. With a strong profitability rank and solid growth metrics, Restaurant Brands International LP appears to be in a good position to continue rewarding shareholders. Still, investors should always weigh these factors against overall portfolio goals and market conditions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
