Last week, restaurant franchisor and operator MTY Food Group (TSX:MTY) announced that it would be increasing its dividend. The new quarterly payout will be 37 cents, up from the previous 33 cents it was paying, for an increase of 12%. It's a significant rate hike for the company, and it comes at a time when many restaurant businesses are struggling, making this development particularly noteworthy.
The company believes in its ability to generate strong cash flow in the future, giving it confidence to give investors such a sizeable boost to their dividend payments. With the increase, the stock is now yielding 3.4% per year. If you wanted to collect $1,000 in annual dividend payments from MTY, you'd need to invest approximately $29,400.
The past 12 months, however, haven't been all that great for the stock as it is down 14% and has underperformed the broader markets. Over its past four quarters, the company has reported an operating profit of $167 million on revenue of nearly $1.2 billion. MTY has a broad range of restaurant brands in its portfolio, including Mr. Sub and Jugo Juice. In February, MTY is expected to release its latest quarterly numbers, giving investors an update as to how it's been doing.
For dividend investors, MTY could make for an attractive option to buy and hold. Its payout is above average, the company has some well-known brands, and the stock itself isn't that expensive, trading at an estimated 10 times its future earnings (based on analyst projections of how it will do in the year ahead).
