Dine Brands Global Boosts Its Quarterly Dividend Payout Amount 9.5% (DIN)

After breaking a streak of consecutive annual dividend hikes last year, Dine Brands Global, Inc. (NYSE:DIN) — owner and operator of Appleby’s and IHOP franchises — boosted its quarterly dividend payout amount 9.5% for the upcoming round of distributions.

Dine Brands began dividend distributions in March 2003 and paid the same $0.25 quarterly distribution for the subsequent 23 consecutive quarters. However, when the 2008 financial crisis hit and forced casual diners to reduce their frequency of dining outside of home, Dine Brands Global saw its share price plunge swiftly and the company eliminated its quarterly dividend distributions for calendar year 2009.

After a three-year break with no dividend payouts, the company reintroduced dividend distribution at the beginning of 2013 with a $0.75 quarterly dividend payout amount. This quarterly dividend remained flat for the subsequent two years, before Dine Brands began hiking its quarterly dividend payout amount for the first period of each calendar year.

Unfortunately, after just three years of annual dividend payout boosts, Dine Brands reduced its quarterly dividend payout amount 35% from $0.97 to $0.63. However, DIN’s financial performance has been strong and the company’s share price has gained more than 135% over the past 18 months. Furthermore, the current share price has more than 30% room on the upside before it reaches analysts’ average target rate.

With potential asset appreciation and a 3% dividend yield, some investors might be interested in adding DIN to their portfolio. However, after conducting their own research to verify that DIN aligns with their investing strategy, interested investors should act before the March 19, 2019, ex-dividend date. All shareholders of record prior to that ex-dividend date will be eligible to receive the next round of dividend distributions on the company’s April 5, pay date.

Dine Brands Global, Inc. (NYSE:DIN)

Based in Glendale, California, and founded in 1958, Dine Brands Global, Inc., together with its subsidiaries, owns, franchises, operates and rents full-service restaurants in the United States and internationally. It operates in five segments: Applebee’s Franchise Operations, IHOP Franchise Operations, Rental Operations, Financing Operations and Company-Operated Restaurant Operations. As of December 31, 2018, the company had 1,768 Applebee’s franchised restaurants and 1,831 IHOP franchised and area licensed restaurants. In addition to restaurant operations and management, Dine Brands Global also owns restaurant real estate that it leases or subleases to 676 IHOP and one Applebee’s location. Furthermore, the company’s Finance Operations business segment offers financing of franchise fees and equipment leases. Formerly known as DineEquity, Inc., the company changed its name in February 2018 to Dine Brands Global, Inc.

Dine Brands Global resumed dividend hikes by raising its $0.63 quarterly dividend payout amount from the previous period 9.5% to the $0.69 quarterly dividend distribution. This new quarterly payout corresponds to a $2.76 annualized dividend amount and a forward dividend yield of 3%.

While lower than the company’s own five-year yield average because of the rapidly advancing share price, Dine Brand’s yield still outperformed industry peers. The current 3% yield is more than 50% above the 1.97% average yield of the entire Services sector, as well as 86% higher than the 1.61% simple average yield of the Restaurants industry subsegment. Furthermore, DIN’s current yield is also 26% higher than the 2.38% yield average of the Restaurants segment’s only dividend-paying companies.

While increasing its upcoming quarterly dividend payout, DIN’s rising earnings allowed the company to deliver a 58% dividend payout ratio. This payout ratio is slightly higher than the 30% to 50% payout ratio range generally deemed by investors as sustainable. However, the current ratio is significantly lower than the company’s 81% payout ratio average over the past five years. The lower ratio indicates that the company is now paying a smaller share of its earnings as dividends. A lower payout ratio is a sign that the Dine Brands is in a better position to continue boosting dividend payouts.

In addition to the rising dividend income, Dine Brands Global also delivered to its shareholders a capital gain of more than 23% for a combined total return on investment of 26.2% over the past 12 months. The three-year total return was just 9% because the company’s share price went through a 30-month downtrend after reaching its all-time high in mid-2015. Long-term shareholders enjoyed a slightly better total return on their investment of 29% over the past five years.

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