Brinker International Inc.
) recently hiked its quarterly dividend payout by 4 cents to 20
cents per share, reflecting a 25.0% increase from the prior
dividend payout. This equates to an annual payout of 80 cents per
share. The increased dividend will be paid on September 27, 2012,
to stockholders of record as of September 10, 2012.
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Brinker, the parent of Chili's and Maggiano's, holds a consistent
track record with regards to dividend payout. The latest hike
brings the forward annual dividend yield to 2.36% as of August 23,
2012. Looking back, in August 2011, Brinker had raised its
quarterly dividend by 14%, followed by a 27% hike in March 2010.
Brinker's forward annualized dividend yield of 2.36% surpassed the
industry average of 1.31%. Although it edged past the annualized
dividend yield of 1.75% of one restaurant biggie,
Yum! Brands Inc.
), it lagged another sector behemoth
)'s dividend yield of 3.16%. During the last five years, Brinker's
dividend has grown at a rate of 13.49%; a much faster pace than the
industry average of 5.31%.
This Texas-based restaurant chain has also enhanced shareholders'
value through a share buyback program. On the same day of
dividend hike, the company extended its share buyback program by an
additional $500 million. The latest authorization brings the total
outstanding share repurchases to $626 million. The company has been
repurchasing its common stocks consistently for the last couple of
Brinker's financial position remains stable. It generates
sufficient free cash flow to return capital to the shareholders
through the above-said methods. During the recently concluded
fourth-quarter 2012, the company repurchased 2.7 million shares for
approximately $78.9 million. At year-end, the company had current
assets of $194.8 million and shareholders' equity of $309.9
We appreciate Brinker's efforts to consistently return long-term
shareholder and franchisee value even amidst sluggish economic
growth. We believe that an increase in dividend payment as well as
share repurchase affirms the company's optimistic outlook and
ensures strong future growth.
Brinker currently retains a Zacks #2 Rank, which translates into a
short-term Buy rating. We are maintaining our long-term Outperform
recommendation on the stock.