Brinker International, Inc.
) board of directors recently approved an increase in its quarterly
dividend to 28 cents per share and also authorized the purchase of
up to an additional $350 million of its common stock under the
share repurchase program. This move reflects the company's strong
performance and program execution capability.
The dividend hike marks a 17% increase from the current payout of
approximately 24 cents per share. The proposed hike would bring the
annual dividend to $1.12. The increased quarterly dividend will be
paid on Sep 25, 2014 to shareholders of record at the close of
business on Sep 5, 2014.
With the current annual dividend rate of $1.12 and the current
price of $48.67 (as of Aug 21, 2014), the company has a dividend
yield of approximately 2.3%.
This is the fourth consecutive dividend increase since Brinker
International began paying quarterly dividends in Nov 2010.
In Aug 2013, Brinker hiked its quarterly dividend by 20% to 24
cents per share. Earlier, in 2012 and 2011, the company raised the
dividend by a respective 25% and 14%.
The company has been repurchasing its common stock for the last
couple of quarters. In Aug 2013, the company infused an additional
$200 million into its share buyback program. As per the new share
repurchase program, the company is permitted to repurchase up to an
additional $350 million of the company's common stock. This will
bring the company's share repurchase authorization to $3.9 billion.
Brinker is not the only company in the restaurant sector paying
attractive dividends. Another sector behemoth, McDonald's Corp. (
) has a history of increasing dividends every year since the
inception of its dividend payout program in 1976. Yum! Brands Inc.
) has also been raising its dividend over the last few years,
irrespective of economic peaks and valleys. Both these companies
last increased their dividends in Sep 2013.
Brinker's financial position remains stable. It generates
sufficient free cash flow to return capital to shareholders that
boosts investors' confidence in the stock. During the recently
concluded fiscal fourth quarter of 2014, the company repurchased
0.9 million shares for approximately $47.8 million. At year-end,
the company had current assets of $210.9 million.
We appreciate Brinker's efforts to consistently enhance long-term
shareholder value even amid a volatile economic condition. We
believe that a continuous increase in dividend payment affirms the
company's optimistic outlook and indicates strong future
Brinker currently carries a Zacks Rank #4 (Sell). BJ's
Restaurants, Inc. (
) is a better-ranked stock in the same sector with a Zacks Rank #1
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