Yum Brands Holds Up, While Wal-Mart Moves Payout

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While the general market has struggled over the past month and a half, some steady, dividend-paying stocks have held up well.

Fast-food giantYum Brands ( YUM ) certainly matches this description. It has advanced moderately while the main indexes have retreated, helping to explain Yum's strong Relative Strength line.

You could view the stock's recent action as a move past a cup-with-handle pattern with a 77.25 entry.

Yum cleared 72.25 on Nov. 1, drawing active volume that session, though a little below the 40% above-average level that you prefer to see on a breakout day. The stock remains less than 5% past 72.25, meaning it's in a possible buy zone, though it's best to avoid new buys during a market correction.

The operator of KFC, Pizza Hut and Taco Bell has earned an excellent grade of 1 for its three-year and five-year EPS Stability Factors. That's just shy of the best-possible level of 0, and it indicates a steady profit track record.

You want to see this kind of reliability in income stocks, because that makes it less likely that the company will have to reduce or suspend its dividend. Yum pays $1.34 a share each year, which works out to an annualized yield of about 2% .

The Louisville, Ky., company hiked its dividend in September by 18%, its eighth straight double-digit percentage boost to that payout.

Yum is widely known as a good way to get exposure to China, where it draws more than 40% of its revenue. But it's also targeting India as its next key market, as noted in an Oct. 18 IBD story.

Note that some analysts have described Yum's reputation as a China play as almost a "curse," as Credit Suisse put it in an Oct. 10 research note. That's because given the general uncertainty around China right now, there could be more volatility in Yum's stock in the near- to medium-term.

Separately,Wal-Mart ( WMT ) on Monday rescheduled the date of its next dividend payment to Dec. 27 from Jan. 2. It said the move is best for its shareholders, given that it's not clear how taxes on dividends will be treated in Washington's fiscal-cliff talks.

Other firms also have moved up their payouts for this reason.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: WMT , YUM

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