YUM! Brands Upgraded at Goldman Sachs (YUM)

YUM! Brands Upgraded at Goldman Sachs (YUM)

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Goldman Sachs reported on Thursday that they have upgraded restaurant company, Yum! Brands, Inc.(YUM) to a “Buy.”

The firm has upgraded YUM from “Neutral” to a “Buy,” and have increased its price target from $67 to $77. This price target suggests a 12% increase from the stock’s current price of $67.64.

An analyst from the firm commented, “we see YUM as the premier emerging markets company in Restaurants and believe that uncertainty in China driven by the company’s recent negative SSS figure in that geography provides for a good entry point into the shares. Our analysis suggests that YUM’s recent soft sales in China are macro-driven and not the result of a fundamental deterioration of the company’s long-term trajectory in China.”

Looking ahead, the firm has reaffirmed its estimates for 2012 EPS of $3.25. Goldman Sachs expects to see 2013 EPS of $3.76 and 2014 EPS of $4.37.

YUM! Brands is a restaurant company which operates several chain restaurants including KFC, Pizza Hut, Taco Bell, Long John Silver’s, and A&W All-American Food Restaurants. In its most recent quarter, YUM reported net income of $471 million and revenue of $3.57 billion.

YUM! Dividend In Focus

YUM! Brands paid out a dividend of 33.5 cents in the latest quarter, which represents a dividend yield of about 1.98%. The company increased their quarterly dividend payment to 33.5 cents from 28.5 cents in November. The next payment of 33.5 cents will be paid February 1 to shareholders of record on January 11. This stock has a ex-dividend date of January 9. (view the Dividend.com Ex-Dividend Tool for information on all upcoming ex-dividend dates).

Recent YUM! Brands dividends include:

  • October 2, 2012: $0.335
  • August 3, 2012: $0.285
  • May 4, 2012: $0.285

In addition to slowly increasing its absolute dividend payout, YUM’s payout ratio has gradually increased over the past three years:

Year Dividend ($M) Payout Ratio
2009 $376.7 35.1%
2010 $427.6 37%
2011 $500 37.8%

YUM’s vs. The Competition

Dividend.com has identified several dividend paying companies as direct competition for YUM including: Darden Restaurants(DRI), The Wendy’s Company(WEN), McDonalds(MCD),Bob Evans Farms(BOBE), and Brinker International(EAT). These companies are all similar to YUM regarding dividend yield, as well as their Dividend.com DARS™ rating.

Ticker Company Yield DARS
YUM YUM! Brands 1.98% 3.4
WEN The Wendy’s Company 3.39% 2.9
BOBE Bob Evans Farms 2.72% 3.4
MCD McDonald’s 3.45% 3.4
DRI Darden Restaurants 4.37% 3.4
EAT Brinker International 2.60% 3.4

Use the Dividend.com screener to see all dividend-paying consumer goods stocks, or run other custom searches for dividend-paying stocks.

Yum! shares were up 98 cents, or 1.48% during premarket trading Thursday. The stock is up 14.6% YTD.

Yum! Brands, Inc.(YUM) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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