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Could Jack in the Box Raise Its Dividends in 2Q16?

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May. 23 2016, Updated 1:04 a.m. ET

Dividends

Wall Street analysts are expecting Jack in the Box (JACK) to increase dividends for 2Q16 to $0.35 from $0.30 in 1Q16. They are also expecting the company to pay dividends of $0.33 in 3Q16 and 4Q16. Overall, for fiscal 2016, JACK is expected to pay dividends of $1.30, which represents a growth of 30% from $1 in 2015.

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Dividend yield

The dividend yield for 2Q16 is expected to be 1.96%, and for the next 12 months, it is expected to be 2.01%. Peers McDonald’s (MCD), Restaurant Brands International (QSR), and The Wendy’s Company (WEN) are expected to pay dividends with yields of 2.8%, 1.3%, and 2.3%, respectively. A company’s dividend yield indicates how much a company pays out in dividends each year relative to its share price.

Capital reallocation

Apart from dividends, JACK, which forms 0.18% of the holdings of the PowerShares FTSE RAFI US 1500 Small-Mid Portfolio ETF (PRFZ), also rewards its shareholders with share repurchases. Repurchasing of shares reduces outstanding shares, thereby increasing earnings per share. In the last three quarters, JACK has purchased 2.9 million shares at an aggregate cost of $240.5 million. As of January 17, 2016, the company had $100 million under its share repurchase program, which expires in November 2017. In the next article, we’ll discuss JACK’s valuation multiples.

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