Wendy’s (NASDAQ:WEN) dividend will be $0.125

The Wendy’s Company (NASDAQ:WEN) investors are due to receive a payout of $0.125 per share on Sept. 15. Based on this payout, the dividend yield on the company’s stock will be 2.5%, which is an attractive increase in returns for shareholders.

See our latest analysis for Wendy’s

Wendy’s dividend is well covered by earnings

A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Based on the last payout, Wendy’s was earning comfortably enough to cover the dividend. This means that a large portion of his income is kept to grow the business.

Next year is expected to see EPS increase by 46.3%. If the dividend continues on this path, the payout ratio could be 44% by next year, which we believe can be quite sustainable in the future.

NasdaqGS:WEN Historic Dividend August 26, 2022

Dividend volatility

The company has a long history of dividends, but it doesn’t look good with the cuts of the past. The annual payment over the past 10 years was $0.08 in 2012, and the most recent year’s payment was $0.50. This implies that the company has increased its distributions at an annual rate of approximately 20% over this period. Despite rapid dividend growth over the past few years, we have also seen payouts decline in the past, which makes us cautious.

The dividend should increase

Earnings per share growth could be a mitigating factor given past dividend fluctuations. We are encouraged to see that Wendy’s has increased its earnings per share by 17% per year over the past five years. Shareholders receive a large portion of the profits that are returned to them, which, combined with strong growth, makes this very attractive.

Wendy’s looks like a great dividend stock

Overall, we want the dividend to remain constant and believe Wendy’s may even increase payouts in the future. The company is easily earning enough to cover its dividend payments and it’s good to see that income translate into cash flow. Overall, this checks a lot of the boxes we look for when choosing an income stock.

It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. However, there are other things for investors to consider when analyzing stock performance. Example: we have identified 2 warning signs for Wendy’s (of which 1 is significant!) that you should know. Isn’t Wendy’s just the opportunity you’ve been looking for? Why not check out our selection of the best dividend stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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