An In-Depth Look at Yum China Holdings Inc's Dividend Sustainability and Growth
Yum China Holdings Inc (YUMC, Financial) recently announced a dividend of $0.13 per share, payable on 2023-12-19, with the ex-dividend date set for 2023-11-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Yum China Holdings Inc's dividend performance and assess its sustainability.
What Does Yum China Holdings Inc Do?
With almost 13,000 units and USD 10 billion in systemwide sales in 2022, Yum China is the largest restaurant chain in China. It generates revenue through its own restaurants and franchise fees. Key concepts include KFC (9,094 units) and Pizza Hut (2,903), but the company's portfolio also includes other brands such as Little Sheep, East Dawning, Taco Bell, Huang Ji Huang, COFFii & Joy, and Lavazza (collectively representing about 950 units). Yum China is a trademark licensee of Yum Brands, paying 3% of total systemwide sales to the company it separated from in October 2016.
A Glimpse at Yum China Holdings Inc's Dividend History
Yum China Holdings Inc has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Yum China Holdings Inc's Dividend Yield and Growth
As of today, Yum China Holdings Inc currently has a 12-month trailing dividend yield of 1.14% and a 12-month forward dividend yield of 1.16%. This suggests an expectation of increased dividend payments over the next 12 months. Extended to a five-year horizon, this rate increased to 24.10% per year. Based on Yum China Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Yum China Holdings Inc stock as of today is approximately 3.36%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Yum China Holdings Inc's dividend payout ratio is 0.28.
Yum China Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Yum China Holdings Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Yum China Holdings Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Yum China Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Yum China Holdings Inc's revenue has increased by approximately -0.20% per year on average, a rate that outperforms approximately 53.99% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Yum China Holdings Inc's earnings increased by approximately -17.60% per year on average, a rate that outperforms approximately 24.79% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -6.50%, which outperforms approximately 27.1% of global competitors.
Engaging Conclusion: Yum China Holdings Inc's Dividend Outlook
In conclusion, Yum China Holdings Inc's consistent dividend payments, moderate growth rate, reasonable payout ratio, and good profitability and growth metrics paint a picture of a company that is committed to rewarding its shareholders while maintaining a strategic focus on growth and stability. With its robust business model and strong market presence in China, Yum China Holdings Inc appears well-positioned to continue its dividend payments. However, as with any investment, it's crucial for investors to consider the broader economic context and the company's future prospects. Will Yum China Holdings Inc continue to thrive in the competitive food industry, and what will be the impact of global economic trends on its dividend sustainability? These are questions value investors should contemplate as they consider adding Yum China Holdings Inc to their portfolios.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
