Yum! Brands Inc.
) has been uninterruptedly following its cash deployment strategy
through dividend payments and share buybacks. Following the
trend, the board of directors recently authorized share
repurchases of up to $750 million in additional shares of common
stock. The company also announced a dividend of 37 cents per
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Subject to market conditions, these buybacks can be made from
time to time in the open market or via privately negotiated
transactions. This additional share buyback is authorized through
May 31, 2015. To date, the company has bought back $708 million
shares at an average price of $68. In Nov 2012, the board had
last authorized a repurchase of up to $1 billion in additional
shares of common stock through May 31, 2014.
The quarterly dividend of 37 cents will be paid on Feb 7, 2014 to
shareholders of record at the close of business on Jan 17, 2014.
The company has increased its dividend at a double-digit
percentage rate over the past nine years, since it began
distributing dividends. The last double-digit percentage rate
increase of 10.0% was announced in Sep 2013. Prior to that, the
company hiked its dividend by 18% in Sep 2012.
Yum! Brands continues to take initiatives that would keep the
stock attractive for investors while maintaining its price. The
company recently announced a complete restructuring of its
business divisions. This comes in the wake of disappointing
financial results for the past few quarters due to weak
performance in its China division. China, which once played a
pivotal role in the company's growth story, began to falter after
fourth-quarter 2012 due to bad publicity resulting from a quality
issue. Given the poor performance of KFC China in September, Yum!
now expects China comps to decline further in the fourth quarter.
Even though the Zacks Rank #4 (Sell) company has undertaken
quality assurance measures, marketing campaigns and various
promotional offers, it will take some time to recover completely.
Further, all these initiatives will likely result in incremental
expenses that will weigh on the bottom line.
Some better-ranked stocks in the industry include
Buffalo Wild Wings Inc.
Bob Evans Farms, Inc.
Burger King Worldwide, Inc.
). While Buffalo Wild Wings holds a Zacks Rank #1 (Strong Buy),
Bob Evans and Burger King hold a Zacks Rank #2 (Buy).