Hello, today is Monday and it is a national holiday in Japan. However, the situation at work forced me to work at home even on the holiday. I don’t know how long I need to sacrifice my weekend and holidays to try to save a sinking ship.
Anyhow, today I initiated a position in YUM(Yum Brands Inc), specifically I purchased 15 shares for $71.47 per share.
Yum Brands Inc through the three concepts of KFC, Pizza Hut and Taco Bell, develops, operates, franchises and licenses a system of restaurants which prepare, package and sell a menu of competitively priced food items.
It consists of five segments YUM China (China Division), YUM India (India Division), The KFC Division, The Pizza Hut and The Taco Bell Division. YUM China includes all operations in mainland China. YUM India includes all operations in India, Bangladesh, Nepal and Sri Lanka.
According to an August report from Goldman Sachs, China accounts for 52% of the company’s sales.
Let’s look at its metrics
Current Dividend Yield : 2.59%
TTM P/E : 33.61
Dividend payout ratio : 78.3%
Dividend coverage by FCF : 1.24
5-year EPS growth : 0.89% (3-year EPS Growth : -7.3%)
5-year dividend growth : 14.8%
The reason for my purchase is as follows. First and foremost, i have been looking for an opportunity to invest in the fast food industry since I parted away with MCD’s stocks. Second, since 2011, the dividend yield of Yum’s has rarely exceeded 2% and I thought this was an rare opportunity to add this stock at an attractive price. Finally, Yum has managed to increase dividends for 11 years in a row since 2004 and just announced to lift its quarterly payout by 12% to 46 cents per common share from 41 cents despite the fact that the 5-year EPS growth is just 0.89% and payout ration is 78.3%. I determined that the management was confident in bringing the company back on track and the company was over penalized by the stock market ( I hope).
My entry yield is 2.57% and this purchase adds $27.6 to my annual dividend income, based on the current $0.46 quarterly dividend
Disclosure: Long YUM