Dunkin' Brands (
), the operator of Baskin-Robbins ice cream parlors and Dunkin'
Donuts stores, is serving up a balanced diet of capital gains and
The stock is up 18% this year, almost double the S&P
Dunkin' Brands went public in July 2011, five years after the
company was bought by a private-equity firm. Profits have
increased for four straight years. However, quarterly profit
growth has slowed for three straight quarters, rising just 13% in
the fourth quarter from a year ago. Revenue growth has also
slowed, with sales actually decreasing in the most recent
Yet the company boosted its quarterly dividend at the end of
January by 27% to 19 cents a share, or 76 cents annually. That
was the first hike since Dunkin' began paying a dividend in Q1
2012. The annual dividend yield is now about 2%, roughly in line
with the S&P 500 average.
Analysts say Dunkin' enjoys solid growth prospects, as noted
recent New America story in IBD
As part of its expansion beyond its stronghold in the
Northeast, Canton, Mass.-based Dunkin' has in recent weeks
announced plans for new franchises in West Virginia, Ohio and
Utah. It eventually plans to expand west into California.
Dunkin' is also adding to its menu, recently introducing
chicken and tuna wraps to go with its traditional
coffee-and-doughnuts fare and its growing list of sandwiches and
One concern is Dunkin's huge debt-to-equity ratio of 534%,
which could become a problem if interest rates rise. For now,
though, increases in cash-flow per share and annual pretax margin
bode well for the stock.
IBD-style investors could soon get a chance to buy the stock
if it clears a 40.10 buy point from a flat base in fast