Brinker Hikes Dividend - Analyst Blog
August 31 2011 - 10:58AM
Zacks
Brinker International Inc. (EAT) recently
announced a hike of 2 cents in its quarterly dividend to 16 cents
per share, reflecting a 14.0% increase from the prior dividend
payout. The increased dividend will be paid on September 29, 2011,
to stockholders of record as of September 9, 2011.
Brinker has a consistent track record of paying dividends, and
the latest hike brings the forward annual dividend yield, as of
August 29, 2011, to 2.78%. Previously, in March 2010, Brinker had
increased its quarterly dividend by 27% to 14 cents per share to
boost shareholder value.
In a concerted effort to enhance shareholders’ value, the
Texas-based company also has a share buy back program in place. In
the fourth quarter, the company repurchased 2.5 million shares for
a total of $62.9 million, thus bringing the total to approximately
20.6 million shares for $420.0 million in fiscal 2011.
In June 2011, the company’s board of directors authorized an
additional $250 million for its current share repurchase program
bringing the total authorization to $2,885 million. The program
comes without an expiration date. Previously, in November last
year, Brinker authorized an additional $325 million in shares
repurchases.
Brinker’s forward annualized dividend yield of 2.78% has surpassed the
industry average of 1.48%. It inched past the forward annualized
dividend yields of 1.90% and 2.71% of restaurant biggies
Yum!
Brands Inc. (YUM) and
McDonald’s
Corp. (MCD), respectively. However,
the yield of Brinker lagged Darden Restaurants
Inc’s.
(DRI) dividend yield of 3.75%,
and the company recently hiked its dividend by 34%.
Further,
Brinker has strong liquidity to support its share buyback
and dividend distribution program. At the end of the fourth
quarter, the company had current assets of $221.4 million.
We appreciate Brinker’s efforts to consistently return long-term
shareholder and franchisee value even amidst slower economic
growth. We believe that an increase in dividend payment affirms the
company’s optimistic outlook and depicts that it is heading toward
strong future growth.
The company currently owns, operates or franchises 1,579
restaurants under the names Chili's Grill & Bar (1,534
restaurants) and Maggiano's Little Italy (45 restaurants) and holds
a minority investment in Romano's Macaroni Grill.
Brinker currently retains a Zacks #2 Rank, which translates into
a short-term Buy rating. We are maintaining our long-term Neutral
recommendation on the stock.
DARDEN RESTRNT (DRI): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis Report
YUM! BRANDS INC (YUM): Free Stock Analysis Report
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