This Food Stock Recently Reinstated its Dividend and Could Be a Great Buy on the Dip

During the COVID-19 pandemic, many companies have been cutting or suspending their dividend payments entirely. One industry that’s been hit particularly hard is the restaurant industry where even now businesses are operating at reduced capacities. One stock that suspended its dividend payments was the A&W Revenue Royalties Income Funds (TSX:AW.UN).

On March 31, the fund announced a temporary suspension to its payouts “to preserve capital during this period of uncertainty.” At the time it was unclear how long the suspension may last as the pandemic was still in its early stages. But on July 7, A&W announced it would be resuming its monthly distributions and that the shareholders would be receiving a $0.10 payment per trust unit on July 31.

The trustees of the fund saw sufficient improvement in the performance of the restaurants in the fund to justify paying a dividend again. Shares of the A&W fund jumped on the news and the stock was up over 10% last month.

It’s great news on two fronts. The first is that if the $0.10 monthly payments continue, then that means shareholders will be earning a solid dividend yield of over 4% per year. And another reason to be bullish on this news is that it’s a sign that the trustees believe that even now, when restaurants are still not fully and running, that they’re performing well enough to support the dividend. The stock’s still down more than 20% this year and now could be a great opportunity to invest in the A&W fund.