Assessing the sustainability and growth of Darden Restaurants Inc's dividends
Darden Restaurants Inc (DRI, Financial) recently announced a dividend of $1.31 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-10-06. 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 deep dive into Darden Restaurants Inc's dividend performance and assess its sustainability.
What Does Darden Restaurants Inc Do?
Darden Restaurants is the largest restaurant operator in the U.S. full-service space, with consolidated revenue of $10.5 billion in fiscal 2023. The company maintains a portfolio of 10 restaurant brands: Olive Garden, LongHorn Steakhouse, and others. Darden operates 1,914 restaurants in the U.S. and generates revenue almost exclusively from company-owned restaurants, though a small network of franchised restaurants and consumer-packaged goods sales through the traditional grocery channel contribute modestly.
A Glimpse at Darden Restaurants Inc's Dividend History
Darden Restaurants Inc has maintained a consistent dividend payment record since 1995, with distributions made on a quarterly basis. The following chart shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Darden Restaurants Inc's Dividend Yield and Growth
As of today, Darden Restaurants Inc currently has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 3.59%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Darden Restaurants Inc's annual dividend growth rate was 22.40%, decreasing to 11.70% per year over a five-year horizon. Over the past decade, Darden Restaurants Inc's annual dividends per share growth rate stands at 6.50%.
Based on Darden Restaurants Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Darden Restaurants Inc stock as of today is approximately 6.12%.
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 2023-08-31, Darden Restaurants Inc's dividend payout ratio is 0.61.
Darden Restaurants Inc's profitability rank of 8 out of 10 as of 2023-08-31 suggests good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
Darden Restaurants Inc's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. Darden Restaurants Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Darden Restaurants Inc's revenue has increased by approximately 10.30% per year on average, a rate that outperforms approximately 81.65% of global competitors.
Next Steps
Considering Darden Restaurants Inc's consistent dividend payments, robust growth rate, sustainable payout ratio, and strong profitability, it presents an attractive proposition for value investors. The company's strong growth metrics further enhance its appeal. However, as with any investment, it is crucial to conduct thorough research and consider the company's overall financial health before making an investment decision.
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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.
