Will Darden Restaurants’ Fiscal 4Q16 Keep Up the Momentum?

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Part 7
Will Darden Restaurants’ Fiscal 4Q16 Keep Up the Momentum? PART 7 OF 9

Analysts Expect No Rise in Darden’s Fiscal 4Q16 Dividends


Darden Restaurants (DRI) paid dividends of $0.55 per share in first two quarters of fiscal 2016, and in fiscal 3Q16 it paid a dividend of $0.53.

Analysts expect Darden to pay a $0.53 dividend in fiscal 4Q16, which would make its total dividend amount for fiscal 2016 $2.16. This would be a fall of 2.2% compared to fiscal 2015. For fiscal 2017, analysts expect Darden to declare a dividend of $2.24, a rise of 4.3% over fiscal 2016.

Analysts Expect No Rise in Darden&#8217;s Fiscal 4Q16 Dividends

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Dividend yield

A company’s dividend yield indicates how much it pays out in dividends each year relative to its share price. For the next 12 months, analysts expect Darden’s dividend yield to be 3.1%.

DRI’s peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) are expected to have dividend yields of 1.8%, 1.7%, and 3.2%, respectively, during the same period.

Capital allocation

Apart from dividends, Darden Restaurants, which forms 0.14% of the holdings of the iShares Russell Mid-Cap ETF (IWR), also rewards its shareholders with share repurchases. On December 16, 2015, Darden’s board of directors authorized a share repurchase program through which the company could buy up to $500 million worth of shares.

During the first three quarters of DRI’s fiscal 2016, the company purchased shares worth $140 million, leaving $360 million under the share repurchase program. Before this, the board of directors had authorized the repurchase of 187.4 million outstanding shares. Share repurchases reduce the number of shares outstanding, thus increasing a company’s EPS.

In the next article, we’ll discuss Darden’s valuation.


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