Be sure to check out Yum! Brands, Inc. (NYSE: YUM) before it became ex-dividend

Yum! Trademarks, Inc. (NYSE: YUM) is set to trade ex-dividend within the next three days. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. It is important to know the ex-dividend date because any transaction in the share must have been settled by the registration date at the latest. This means that you will have to buy Yum! Brands before August 26 to receive the dividend which will be paid on September 10.

The company’s next dividend payment will be US $ 0.50 per share. Last year, in total, the company distributed US $ 2.00 to shareholders. Based on the value of last year’s payments, Yum! Brands has a rolling 1.5% return on the current share price of $ 134.46. If you are buying this company for its dividend, you should know if Yum! The brands dividend is reliable and sustainable. We must therefore investigate to find out if Yum! Brands can afford its dividend, and so the dividend could increase.

See our latest review for Yum! Brands

If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Fortunately, Yum! The distribution rate of brands is modest, at just 44% of profits. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Fortunately, she has only paid out 38% of her free cash flow in the past year.

It’s positive to see that Yum! Brands’ dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend. is not cut.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

NYSE: YUM Historical Dividend August 22, 2021

Have profits and dividends increased?

Companies with consistently rising earnings per share usually make the best dividend-paying stocks because they generally find it easier to raise dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. For this reason, we are happy to see Yum! Brands’ earnings per share have grown 16% per year over the past five years. Earnings per share have grown rapidly and the company keeps the majority of its profits with the business. Fast-growing companies that reinvest heavily are attractive from a dividend standpoint, especially since they can often increase the payout ratio later.

Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Over the past 10 years, Yum! Brands has increased its dividend by around 7.2% per year on average. We are happy to see dividends increasing alongside earnings over multiple years, which may be a sign that the company intends to share the growth with its shareholders.

Last takeaways

Yum! Do brands have what it takes to maintain their dividend payments? It’s great this Yum! Brands increases earnings per share while simultaneously paying a small percentage of earnings and cash flow. It’s disappointing that the dividend has been cut at least once in the past, but as it stands, the low payout ratio suggests a conservative approach to dividends, which we like. It is a promising combination that should mark this company worthy of further attention.

So as long as Yum! Brands looks good from a dividend perspective, it’s always worth being aware of the risks involved in this stock. For example, Yum! Brands have 3 warning signs (and 2 that shouldn’t be ignored) we think you should be aware of.

However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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