Brinker Increases Dividend By 27%
- March 26, 2010
- Dividend Investing, Dividend News, Dividend Stocks
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Brinker International (EAT: 27.45 +0.81%) announced today that the company will increase their quarterly dividend by 27% from $.11 per share to $.14 per share.
Following the dividend increase, Brinker stock will offer investors a 2.8% dividend yield.
The positive dividend announcement follows yesterday’s announcement that Brinker will be selling their On The Border restaurants for an undisclosed amount. The company will now focus on their Chili’s restaurants which already accounts for 80% of their operating profits.
The new Brinker will also try to put more focus on returning cash to their shareholders. In the future, Brinker will use a 40% dividend payout ratio as a guideline for providing additional return to shareholders. Based on Wall Streets consensus estimates of $1.39 EPS in fiscal 2010, the company’s current dividend payout ratio is right at 40%. However, earnings are expected to grow 8% in 2011 which should lead to dividend growth opportunities.
The dividend increase will be effective for the company’s fourth quarter dividend payment on July 1, to shareholders of record as of Jun 17, 2010.
The Board of Directors also authorized an additional $250 million of share repurchases. This brings the total available authorization to $310 million. The company will use the proceeds from the sale of On The Border as well as excess free cash flow from the business to repurchase shares.
Brinker also increased their earnings guidance for fiscal 2010. The new guidance range is now $1.40 – $1.44 EPS, up from their original range of $1.15 - $1.30. The guidance increase is primarily driven from better than expected same-store-sales (sss).
