Top 5 Restaurant Dividend Stocks

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 |  Includes: BOBE, CBRL, CKR, EXPE, MCD, YUM
by: eChristian Investing
Dividend investors should be thrilled with all the positive announcements of dividend hikes in recent weeks. Paying dividends seems to be a much higher priority for companies in 2010, and even internet growth stocks like Expedia are getting into the act. Investors should be thrilled that the number of attractive dividend stocks is expanding.
Of course you will continue to find the highest yielding dividend stocks in the traditional sectors like telecom and utilities. However, there are now 193 stocks in the S&P 500 that offer dividend yields of over 2%. Many of these stocks offer not only a nice dividend yield, but the chance of significant price appreciation.
eDividendStocks.com has pinpointed the top five restaurant dividend stocks that income investors should eat up. These stocks all offer dividend yields over 2% and potential for significant earnings growth as the economic climate improves.
McDonalds
McDonald’s is the only stock in the Dow Jones index that has seen its stock price increase each of the last four years. Since 2006, McDonald’s stock price has soared over 85% and has easily outperformed all other Dow stocks during that time period. This strong track record (even in the face of a tremendous recession) along with a nice 3.5% dividend yield should cause investors to take notice.
Dividend Yield: 3.5%
2011 EPS Growth: 9%
2010 Est. Dividend Payout Ratio: 50%
CKE Restaurants
CKE Restaurants, the operator of Carl’s Jr. and Hardees restaurants, is currently trading at only 10.7x consensus 2011 EPS estimates. This is below the relative multiples of their peer group and seems to discount the anticipated 15% earnings growth in 2011.
Dividend Yield: 2.9%
2011 EPS Growth: 15%
2010 Est. Dividend Payout Ratio: 35%
Cracker Barrel
While Cracker Barrel is the lowest yielding stock in this report, they also sport the lowest payout ratio. After keeping their dividend steady in 2009, we anticipate the company will significantly increase their dividend in September.
Dividend Yield: 2.1%
2011 EPS Growth: 9%
2010 Est. Dividend Payout Ratio: 24%
Bob Evans
Bob Evans continues to manage their cost structure despite a difficult sales environment. The company increased their dividend by 12.5% in November and also began a stock repurchase program. Management has stated that they are committed to utilizing their strong balance sheet to increase shareholder value.
Dividend Yield: 2.6%
2011 EPS Growth: 8%
2010 Est. Dividend Payout Ratio: 32%
Yum! Brands
Yum! Brands has seen their stock price slide in 2010 despite delivering better than expected earnings and revenue results. The company still believes they can deliver annual earnings growth of at least 10% and probably much better if the sales environment in China improves.
Dividend Yield: 2.5%
2011 EPS Growth: 12%
2010 Est. Dividend Payout Ratio: 35%
Author's Disclosure: None