Get “Cash Back” from Your Favorite Restaurants—No Credit Card Required
I went out for steamed crabs with some friends last weekend. We were all Maryland transplants and have our favorite food joints in Florida that we’ve deemed worthy—even if we have to ask for extra J.O. Seasoning. Somehow, the conversation landed on shellfish dining chains and Joe’s Crab Shack was brought up.
It’s another Landry’s-owned restaurant that seems to have fewer and fewer locations. (We had a similar conversation previously about Rainforest Café.) From an investing perspective, Landry’s is quite interesting.
The company went public in 1993 with a valuation of $30 million. By 2011, that had grown to a whopping $1.7 billion. You won’t find updated numbers on Landry’s stock, as CEO Tilman Fertitta purchased all outstanding shares in 2010. The Bloomberg Billionaires Index estimates his net worth at around $15 billion.
Fast forward to 2021, and the company talked about going public again through a deal with a SPAC called FAST Acquisition. The deal never happened, and Landry’s remains privately owned by Fertitta.
You’ve probably already guessed that all this got me wondering if there are any public restaurant groups with a dividend worth exploring right now.
These Common Lunch Spots Yield 3.8%
I did, in fact, find a few restaurant stocks with a dividend yield above our 3.5% minimum.
The first is Restaurant Brands International Inc. (QSR). The ticker is a clue that it is one of the world’s largest quick-service restaurant (QSR) companies.
Its four chains—Tim Hortons, Burger King, Popeyes, and Firehouse Subs—have over 30,000 restaurants spread across 120 countries. They generate over $40 billion in annual sales and the company continues to expand.
Just last week, Firehouse Subs announced plans to launch its first restaurant in Brazil this year. It will also be its first location in South America. It is part of a larger plan to open more than 500 restaurants across the country in the next 10 years.
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QSR has paid a dividend for the past nine years. It pays $0.58 per quarter for an annualized yield of 3.8% at current prices. The reason QSR’s yield is above our minimum is that shares are down 20% over the past year. Zooming out, shares are up 16% over the past three years.
I’m not going to lie, I’d like to see a higher yield for a stock that relies on consumer discretionary spending. When money is tight, people tend to eat out less.
However, there is the argument that QSR restaurants stand somewhere between fast food and casual dining. That makes them popular with the wallet-conscious crowd that still wants to eat out.
The company will report full-year 2024 results on February 12. So, if you want to collect a dividend from some of your favorite QSR restaurants, I would tune in to see what management is forecasting for 2025. I also expect to see a dividend increase announced around that time.
And These Casual Dining Favorites Yield 8.3%
The second company I found is one of the world’s largest casual dining companies with more than 1,450 restaurants worldwide. It started when four friends opened an Australian-themed restaurant in Tampa Florida in the late ’80s.
I’m of course talking about the first Outback Steakhouse which grew into Bloomin’ Brands, Inc. (BLMN). The company also owns Carabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar. Coincidently, BLMN also just announced it will expand into Brazil using a franchise partnership with Vinci Partners.
BLMN suspended its dividend in 2020, but it resumed in March 2022. It has since raised the dividend from $0.14 to $0.24 quarterly. That being said, it’s paid that $0.24 for the last eight payments without another increase.
Shares are down 54% over the past year which explains the generous dividend. BLMN is in the same situation as QSR. They have both moved into our “worthwhile yield” range due to share price drops.
Because of this, they should both be on our watchlist. Will the move into Brazil make enough of a difference for either one? Will either management team be more optimistic about 2025? I’m not sure. But I will be watching for a turnaround on both of these giants. That could mean opportunity for us.
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For more income, now and in the future,
Kelly Green
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