Restaurant Brands International's (NYSE:QSR) Shareholders Will Receive A Bigger Dividend Than Last Year
Restaurant Brands International Inc. (NYSE:QSR) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of April to $0.58. This will take the annual payment to 2.9% of the stock price, which is above what most companies in the industry pay.
View our latest analysis for Restaurant Brands International
Restaurant Brands International's Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite comfortably covered by Restaurant Brands International's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.
Looking forward, earnings per share is forecast to rise by 39.8% over the next year. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.
Restaurant Brands International Doesn't Have A Long Payment History
Restaurant Brands International's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2015, the annual payment back then was $0.36, compared to the most recent full-year payment of $2.32. This means that it has been growing its distributions at 23% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Restaurant Brands International Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Restaurant Brands International has seen EPS rising for the last five years, at 9.1% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Restaurant Brands International will make a great income stock. While Restaurant Brands International is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Restaurant Brands International has 3 warning signs (and 1 which is potentially serious) we think you should know about. Is Restaurant Brands International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
