A&W Stock Surges After Q3 Earnings: Should You Scoop Up This Dividend Stock Today?

A&W Revenue Royalties Income Fund (TSX:AW.UN) is a limited purpose trust that owns the A&W trademarks which includes over 850 A&W fast food locations. Shares shot up 5.27% on October 17. The company released its third quarter results before trading opened on the same day.

A&W reported same store sales growth of over 13% from the prior year and royalty income climbed 18% year-over-year to $10.5 million. The number of restaurants in the royalty pool also increased to 896 over 961 at the end of the third quarter of 2018.

Adjusted net income rose to $8.59 million compared to $6.78 million in Q3 2017. Earnings were powered by the additional net 35 restaurants year-over-year as well as the solid same-store sales growth.

On October 2 A&W declared a cash dividend of $0.141 per share which represents an attractive 4.9% dividend yield. A&W stock is down marginally in 2018 so far, but its high-income yield has made it a solid hold throughout the year.

Restaurant stocks have been a mixed bag for investors over the past several years. However, fast food establishments remain a stable option. Investors on the hunt for dividend stocks should consider A&W a viable option in the early fall.

This is especially true in a choppy market. Restaurants in Canada are expected to experience continued price inflation into the next decade which should also prop up internal growth going forward.