Dine Brands Global, Inc.’s (NYSE:DIN) investors are due to receive a payment of $0.51 per share on 8th of October. Based on this payment, the dividend yield on the company’s stock will be 6.6%, which is an attractive boost to shareholder returns.
View our latest analysis for Dine Brands Global
Dine Brands Global’s Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn’t matter if the payment isn’t sustainable. However, Dine Brands Global’s earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS is forecast to fall by 20.4%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 40%, which is comfortable for the company to continue in the future.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of $3.00 in 2014 to the most recent total annual payment of $2.04. Doing the maths, this is a decline of about 3.8% per year. Generally, we don’t like to see a dividend that has been declining over time as this can degrade shareholders’ returns and indicate that the company may be running into problems.
Dividend Growth May Be Hard To Achieve
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Although it’s important to note that Dine Brands Global’s earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While growth may be thin on the ground, Dine Brands Global could always pay out a higher proportion of earnings to increase shareholder returns.
In Summary
Overall, we think Dine Brands Global is a solid choice as a dividend stock, even though the dividend wasn’t raised this year. The payout ratio looks good, but unfortunately the company’s dividend track record isn’t stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we’ve identified 3 warning signs for Dine Brands Global (2 can’t be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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