Dividend Stock Wednesday: Yum Brands Inc. (YUM:NYSE)
- 6 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.
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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.
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.
| No | |
| No |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue 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
Click to EnlargeEarnings 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
Click to EnlargeReturn 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
Click to EnlargeDividend 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) |
| 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
6 Comments on this post
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mike said:
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.
April 16th, 2008 at 9:37 am -
dividend tree said:
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
April 16th, 2008 at 9:37 pm
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