Why Darden Restaurants Inc (NYSE:DRI) Is A Top Dividend Stocks

Over the past 10 years Darden Restaurants Inc (NYSE:DRI) has returned an average of 3.00% per year from dividend payouts. The company is currently worth US$11.71b, and now yields roughly 2.66%. Should it have a place in your portfolio? Let’s take a look at Darden Restaurants in more detail. See our latest analysis for Darden Restaurants

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

NYSE:DRI Historical Dividend Yield June 21st 18

Does Darden Restaurants pass our checks?

The current trailing twelve-month payout ratio for the stock is 55.02%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect DRI’s payout to remain around the same level at 55.45% of its earnings, which leads to a dividend yield of around 3.17%. Moreover, EPS should increase to $5.23.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of DRI it has increased its DPS from $0.72 to $2.52 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes DRI a true dividend rockstar.

Compared to its peers, Darden Restaurants has a yield of 2.66%, which is high for Hospitality stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank Darden Restaurants as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for DRI’s future growth? Take a look at our free research report of analyst consensus for DRI’s outlook.

2. Valuation: What is DRI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether DRI is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.