Dividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE)

Written by The Dividend Guy on April 16, 2008

This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.

YUM Brands

One sector of the market that I have not examined in great detail is Food & Restaurants. Awhile back I did an analysis of McDonald’s, but have not touched the sector since. I also do not have any exposure to this sector in my portfolio so I am considering it as a possible area to add. One stock that has caught my ear listening to The Sound Investing Podcast was Yum Brands. Yum Brands is the holding company for well known restaurant chains such as A&W All American Food, KFC, Long John Silver’s, Pizza Hut, and Taco Bell. Their largest area of growth right now is China with multiple stores opening up on a daily basis. However, I had no idea if this stock was a dividend player so I thought I would have a look. Here is my analysis of the stock.

One Point

The Company: Yum Brands Inc. (YUM:NYSE)

YUM! Brands, Inc. (YUM) is a quick service restaurant (QSR) with over 35,000 units in more than 100 countries and territories. Through the five concepts of KFC, Pizza Hut, Taco Bell, LJS and A&W (the Concepts), the Company develops, operates, franchises and licenses a worldwide system of restaurants, which prepare, package and sell a menu of food items.

Dividend Aristocrat (25+ yrs dividend growth)
 No
Dividend Achiever (10+ yrs dividend growth)
 No

THE FUNDAMENTALS

Revenue

YUM - RevenueClick to Enlarge

Revenue Scoring

Criteria Scoring
Consistenly Up with No Down Years 1.0
Up Trend with Less Than 2 Down Years 0.5
Choppy with Greater Than 2 Down Years 0.0
My Revenue Score 0.0

Earnings Per Share

YUM - EPSClick to Enlarge

Earnings Per Share Scoring

Criteria Scoring
Consistenly Up with No Down Years 1.0
Up Trend with Less Than 2 Down Years 0.5
Choppy with Greater Than 2 Down Years 0.0
My EPS Score 0.0

TOTAL FUNDAMENTALS SCORE: 0.0

THE RATIOS

Return on Equity

YUM - ROEClick to Enlarge

Return on Equity Scoring

Criteria Scoring
Above 15% for Last 5 Years 1.0
At Least One Year Below 15% in Last 5 Years 0.0
My ROE Score 0.0

Other Ratios

Ratio Criteria Value Score (Pass=1 / Fail = 0)
Debt to Equity Less Than 0.50 2.82 0.0
Payout Ratio Less Than 60% 32% 1.0
Credit Rating BBB+ BBB- 0.0
Total Ratio Score
-
-
1.0

TOTAL RATIOS SCORE: 1.0

DIVIDEND DATA
Annual Dividends

YUM - DPSClick to Enlarge

Dividend Scoring

Criteria Scoring
25+ Years of Dividend Growth 1.0
10+ Years of Dividend Growth 1.0
Less Than 10 Years of Dividend Growth 0.0
My Dividend Growth Score 0.0

TOTAL DIVIDEND GROWTH SCORE: 0.0

STOCK VALUATION

Valuation Metric Criteria Value Score (Pass=1 / Fail = 0)
Dividend Yield Cur Yld Greater Than 10 Yr Avg Yld 1.3% 0.0
Div Yld Compared to SPY Div Yld Cur Yld Greater Than SPY Yld 1.0% 0.0
P/E Ratio Cur P/E Less Than 10 Yr Avg P/E 15.1 0.0
Relative P/E Relative P/E Less Than 1.0 1.36 0.0
Price to Sales Less Than 1.5 1.71 0.0
Total Ratio Valuation Score
-
-
0.0

Canadian Shareowner’s Association Stock Selection Guide Software Buy Price

Buy Zone
 Maybe Zone
 Sell Zone
 Current Price Rating Scoring (Buy=1.0, Other=0.0)
$30.60 to $36.50
$36.50 to $42.95
$42.95 to $49.39
$37.47
Maybe
 0.0

TOTAL STOCK VALUATION SCORE: 0.0

SUMMARY

Points Earned:

1 out of 14 - half points are rounded down to be conservative

The stock is rated LOW with 1 points earned through my analysis of the stock. There is just not enough history to justify it as a dividend growth stock. Yum Brands has seen some strong growth in the past couple of years, but a sketchy start holds it back from being a part of my portfolio. I will need to see another 5 - 7 years of strong performance in sales growth, EPS growth, and dividend growth before I consider adding it to my dividend portfolio.

Rating Points Required
High 11+ points
Medium 8-10 points
Low < 8 points

Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.

The Dividend Guy does not own shares in YUM


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5 Comments so far

  1. Stock Market » Dividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE) April 16, 2008 9:07 am

    […] ETF Trends - Keeping a grip on exchange traded funds (ETFs) wrote an interesting post today on Dividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE)Here’s a quick excerptDividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE) Written by The Dividend Guy on April 16, 2008 Be the First to Comment » This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis. One sector of the market that I have not examined in great detail is Food & Restaurants. Awhile back I did an analysis of McDonald’s, but have not touched the sector […]

  2. mike April 16, 2008 9:37 am

    I have been a watcher of this stock. One part is Taco Bell will be offer breakfast which will add $100k to $300k in sales to there 20,000 US store. This will be big and help keep the dividend moving up.

  3. dividend tree April 16, 2008 9:37 pm

    TDG,

    Have you looked at ING, AIB, and BCS ? It would give international exposure, dividend stocks, and right now at value. Although, I am not sure if AIB and BCS will pass dividend growth criteria. Any thoughts ?

    DT

  4. yum brands - Google ???? | web888net May 4, 2008 2:37 am

    […] Dividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE)2008?4?16? ?? The Dividend Guy One stock that has caught my ear listening to The Sound Investing Podcast was Yum Brands. Yum Brands is the holding company for well known restaurant chains such as A&W All American Food, KFC, Long John Silver’s, Pizza Hut, …The Dividend Guy Blog - http://www.thedividendguyblog.com - ????????||| […]

  5. franchises and licenses May 12, 2008 7:17 am

    […] by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, ohttp://www.thedividendguyblog.com/dividend-stock-wednesday-yum-brands-inc-yumnyse/T.G.I. Friday’s? Make ‘Right Portion, Right Price’ Permanent Part Of Menu […]

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