Category: Steakhouse

Yum! Brands vs. Restaurant Brands International: Which Is the Better Dividend Stock?

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The fast-food industry is a fruitful hunting ground for dividend investors, as many of these companies are strong, well-established businesses with resilient earnings that can weather difficult economic environments.

Restaurant Brands International (QSR -1.25%) and Yum! Brands (YUM -0.32%) are among the top five largest restaurant operators worldwide, and operate diversified portfolios of restaurant concepts. They operate a franchise-based business model that allows them to collect upfront franchise fees from new franchise owners as well as recurring royalty payments based on franchise revenue.

Both of these dividend payers are solid choices for dividend-growth investors and dividend investors in general. But which of these fast-food empires is the better buy for dividend investors going forward?

Two friends eat burgers and fries at a fast food restaurant.

Image source: Getty Images.

Meet the contestants

As a brief introduction, both Yum! Brands and Restaurant Brands operate diversified portfolios of restaurant concepts worldwide. Interestingly, they both feature three well-established, well-known concepts along with a newer and smaller recent addition to their lineups.

For Restaurant Brands, Burger King, Tim Hortons, and Popeyes Louisiana Kitchen are the mainstays, and Firehouse Subs is the newcomer in its portfolio. For Yum! Brands, KFC (Kentucky Fried Chicken), Pizza Hut, and Taco Bell are the stalls, and Habit Burger is the new addition to the roster.

Restaurant Brands currently operates about 29,000 locations across 100 countries worldwide, while Yum! The brand is nearly twice its size, with more than 53,000 restaurants in 155 countries.

Dividend growth at the drive-thru

Yum! Brands have been a solid dividend stock over the years. The company has paid a dividend every year since 2004 and increased its annual dividend payment every year except for one since 2004. With an annualized dividend of $2.28 in 2022, the company now pays out more than double what it paid in 2014.

Meanwhile, Restaurant Brands has been steadily increasing its dividend payment since 2014, when it came into its current incarnation via a merger between Burger King and Tim Hortons. The company’s annualized dividend of $2.16 this year is now nearly five times higher than its annual payment of $0.44 in 2014. More recently, Yum! Brands’ dividend growth has outpaced Restaurant Brands’ dividend growth over the past five years, as the dividend has grown 58% since 2018, from $1.44 per share annually to $2.28 per share. Meanwhile, Restaurant Brands has increased its payout from $1.80 to $2.16, equating to 20% growth over the same time frame.

Restaurant Brands CEO José Cil has spoken of the company’s commitment to continuing to grow the dividend and has said that management wants to grow the dividend to $1 per quarter over time, which would be a substantial increase from today’s levels. Restaurant Brands’ share price would likely increase as the company moves toward this goal, but a dividend of $1 per quarter per share right now would add up to a yield of about 6%.

A decade of dividends

While these are both good dividend growth stocks, Restaurant Brands’ dividend yield is superior, with a yield of 3.2% versus a yield of 1.8% for Yum! Brands. All else being equal, assuming both companies maintained their current dividend payouts for the next decade and that the share prices remained static, an investor investing $10,000 into shares of Restaurant Brands today and reinvesting the dividends could expect to receive about $3,795 in annual dividend payments over the course of the next decade, versus $1,979 for a holder of Yum! Brands.

In reality, both stocks will fluctuate in price over that time span, and both will likely continue to raise their dividends (making these returns even better in reality), but this shows how big of a difference this 1.4% higher yield can make over time .

Both of these dividends look reasonably safe from a dividend payout ratio perspective with Yum! Brands holding the edge. Yum! Brands have a dividend payout ratio of 52%, while Restaurant Brands have a payout ratio of 70%.

And the winner is…

Restaurant Brands and Yum! Brands will both likely continue to be long-term winners and stocks that continue to grow their dividends over time, so there is a lot to like about both of these stocks.

Yum! Brands have grown their dividend at a faster rate than Restaurant Brands over the past five years. On the other hand, Restaurant Brands has had a substantially higher yield and a higher rate of dividend growth since going public, making it a better dividend stock, in my view.

Yum! Brands enjoy a slightly higher valuation than Restaurant Brands. Yum! Brands trade at a price-to-earnings multiple of 29 times earnings and 25 times forward earnings versus about 22 times earnings and 22 times forward earnings for Restaurant Brands. While this isn’t a huge gulf in valuations, Restaurant Brands’ valuation is a bit more palatable and leaves some more room for upside

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Richmond restaurant cancels conservative Christian group’s reservation

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A restaurant in Richmond last week canceled a reservation for a private event being held by a conservative Christian organization, citing the group’s opposition to same-sex marriage and abortion rights.

“We have always refused service to anyone for making our staff uncomfortable or unsafe and this was the driving force behind our decision,” read an Instagram post from Metzger Bar and Butchery, a German-influenced restaurant in the Union Hill neighborhood whose kitchen is helmeted by co-owner Brittanny Anderson, a veteran of TV cooking shows including “Top Chef” and “Chopped.” “Many of our staff are women and/or members of the LGBTQ+ community. All of our staff are people with rights who deserve dignity and a safe work environment. We respect our staff’s established rights as humans and strive to create a work environment where they can do their jobs with dignity, comfort and safety.”

The group, the Family Foundation, was set to host a dessert reception for supporters on Nov. 30, the group’s president, Victoria Cobb, wrote in a blog post describing the incident. About an hour and a half before it was slated to start, one of the restaurant’s owners called to cancel it, he wrote. “As our VP of Operations explained that guests were arriving at their restaurant shortly, she asked for an explanation,” Cobb wrote. “Sure enough, an employee looked up to our organization, and their wait staff refused to serve us.”

The Family Foundation is based in Richmond and advocates for “policies based on biblical principles.” It has lobbied against same-sex marriage and abortion rights.

In an interview, Cobb said that since he posted about it, he has heard people alarmed by the story and from other dining establishments making it clear they would be welcome. “A lot of people are outraged that a restaurant wants to make a litmus test at the door,” he said. “Everyone should be concerned that people are being denied service based on their politics.”

In her blog post, Cobb liked the restaurant’s move to establishments that refused to serve Black customers in the 1950s and ’60s, and she declared what she called a “double standard” by liberals who think a Colorado baker should not be allowed to refuse to make a wedding cake for a same-sex couple.

Legal experts say neither of those are apt analogies. While it’s illegal to discriminate against someone because of their race or religion, the restaurant’s refusal has to do with the group’s actions, said Elizabeth Sepper, a professor at the University of Texas. “It’s about the overall positions and policies the group has taken — it’s not about Christian vs. non-Christians,” she said. According to the American Civil Liberties Union, DC, Seattle and the Virgin Islands specifically protect people from being refused service because of their political affiliation or ideology.

Reached by phone, Metzger co-owner Kjell Anderson said the owners had no comment beyond the Instagram post.

Restaurants have made news for taking issue with their patrons’ politics. Sarah Sanders, then the White House press secretary and now the governor-elect of Arkansas, was asked to leave the Red Hen in Lexington, Va., in 2018. The owner of the restaurant, Stephanie Wilkinson, wrote that she thought Sanders was “ a person whose actions in the service of our country we feel violated basic standards of humanity.” And a judge in 2018 sided with a New York bar that ejected a customer for wearing a “Make America Great Again” hat in support of President Donald Trump.

If past is prologue, Metzger’s move — which was first reported by Virginia Business — is likely to bring it both criticism and support. Wilkinson described the aftermath of the incident with Sanders — which made headlines around the world — as intense. Her phone lines were hacked, she and her staff had private information about them posted online, and many of them received death threats. People took to Yelp, leaving fake negative reviews, and made reservations they had no intention of keeping. But Wilkinson said people also showed their support by driving in from miles away and by donating to local charities.

As of Tuesday, Metzger’s Yelp page was frozen and an “Unusual Activity Alert” was added. “This business recently received increased public attention, which often means people come to this page to post their views on the news,” the notice reads. “While we don’t take a stand one way or the other when it comes to this incident, we’ve temporarily disabled the posting of content to this page as we work to investigate whether the content you see here reflects actual consumer experiences rather than the recent events.”

The restaurant and the foundation used interest in the event to fundraise. Metzger on Saturday posted an image of a bourbon-based cocktail dubbed “Cracks in the

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What to know about tickets, hotels, restaurants for the Music City Bowl

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Iowa quarterback Spencer Petras, left, and offensive coordinator Brian Ferentz look on as the Hawkeyes offense drives the ball in the third quarter against Nebraska during an NCAA football game on Friday, Nov. 25, 2022, at Kinnick Stadium in Iowa City.

Call it a rematch. The University of Iowa football program heads to the Music City Bowl in Nashville. Iowa faces the Kentucky Wildcats in a rematch of last season’s Citrus Bowl that Kentucky won in the final minutes. The game between the 7-5 Hawkeyes and 7-5 Wildcats of the Southeastern Conference takes place on New Year’s Eve at 11 am CT at Nashville’s Nissan Stadium, home of the Tennessee Titans. ABC will television the game.

For Hawkeye fans interested in traveling to Nashville to watch the game in person, here’s everything you need to know.

more:Iowa football heading to Music City Bowl, where the Hawkeyes’ 2020 game was canceled by COVID

Tickets

On ticketmaster.com, Music City Bowl tickets range from $25 to $139 based on seat location. A few sections are sold out.

How do I get to Nashville?

An overview shot of Nissan Stadium and the Nashville skyline during last year's Music City Bowl between Tennessee and Purdue.

Airlines flying into the Des Moines International Airport unfortunately do not offer direct flights to Nashville. American Airlines, Delta, United and Southwest all offer connecting flights. According to Google Flights, a nearly four-hour flight with a connection that leaves on Friday, Dec. 30, and returns Sunday, Jan. 1, would cost close to $530.

Des Moines road trippers can hit the road for a 10-hour drive southeast across Iowa and through Missouri, Indiana and Kentucky to Tennessee. According to the AAA gas calculator, a vehicle that gets 25 miles per gallon can expect to spend about $164 roundtrip for the nearly 1,400 miles between Des Moines and Nashville.

more:How to watch Iowa football vs. Kentucky in the Music City Bowl

Lodging

All of Dream Nashville Hotel's bars and cocktail lounges offer a wide variety with certain locations leaning towards specialty drinks.

Nashville has a range of hotels, and depending on how close to the stadium you want to stay, a price to match the convenience. Hotels near Nissan Stadium include the Conrad Nashville, Studio 154, Dream Nashville and Hyatt Centric in downtown Nashville, while a Comfort Inn and La Quinta are less than a quarter mile from the stadium.

more:Love hanging with cats, on a roller rink or on a farm? Join us in exploring Iowa’s Off Hours

Where to eat and drink in Nashville

Carabinero prawn, Calabrian chile and Weisenberger grits dish at The Catbird Seat.

Nashville can go toe-to-toe with any excellent dining city in the country. The Tennessean has it’s own list of essential restaurants that includes Audrey and June from chef Sean Brock with tasting menus that explore Southern flavors (try his burger restaurant Joyland for chicken and biscuits at a lower price point), chef Philip Krajeck’s Folk with pizzas and seasonal dishes, or The Catbird Seat, which the Tennessean calls “an extraordinary three-hour culinary adventure.” Go for the real deal Nashville hot chicken at Hattie B’s.

Listen to just about every type of music imaginable in Nashville as well. Head to the Springwater Supper Club & Lounge, one of the oldest bars in Nashville, for a honky tonk with pool and beer. At Attaboy Nashville, just tell your server your mood and the bartender will conjure up a drink. Check out the Tennessean’s list of good cocktail bars as well.

What else is there to do?

Dolly Parton sings her "Hi, God" with a full choir during the 36th annual CMA Awards show at the Grand Ole Opry House in November.

If you bring the kids, head to SoundWaves, an upscale indoor-outdoor water attraction at Gaylord Opryland Resort & Convention Center. Here find more than four acres of slides, a wave pool, FlowRider wave simulator, rapid and lazy rivers, an adults-only area, and more open year rounds.

For the history buff, go to The Hermitage, the home of America’s seventh president Andrew Jackson. The attraction sits on more than 1,000 acres and includes a mansion, gardens and grounds, and the Jackson family tomb.

The shopping buff will enjoy Fifth + Broadway, where they can check out the 55,000-square-foot National Museum of African American Music as well.

Head to the “Smithsonian of country music” aka The Country Music Hall of Fame and Museum for 350,000 square feet of artifacts, two performance theaters, and rotating special exhibitions. Stroll through “Sing Me Back Home” for a history lesson on country music.

Have you really been to Nashville if you don’t go to the historic Grand Ole Opry? See music stars of past, present, and future or take a backstage tour for a glimpse inside the Opry’s 18-themed dressing rooms.

Susan Stapleton is the entertainment editor at The Des Moines Register. Follow her on Facebook, Twitteror Instagram, or drop her a line at [email protected].