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Darden’s Dividend Policy: What’s Expected in Fiscal 1Q17?

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Sep. 30 2016, Updated 7:04 a.m. ET

Dividends

In fiscal 2016, Darden Restaurants (DRI) paid dividends of $2.1, a fall of 4.1% from $2.2 in fiscal 2015. Darden paid dividends at a payout ratio of 59.6% in fiscal 2016. 

Analysts expect Darden to pay dividends of $0.55 in fiscal 1Q17 at a payout ratio of 67.1%. For fiscal 2017, Darden is expected to pay dividends of $2.2, a rise of 4.3%.

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Dividend yield

Dividend yield indicates how much a company pays out in dividends each year relative to its share price. For the next 12 months, analysts are expecting Darden to pay at a dividend yield of 3.6%, while its peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) are expected to have dividend yields of 2.1%, 1.9%, and 2.7%, respectively.

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 through share repurchases. On December 16, 2015, Darden’s board of directors authorized a share repurchase program through which the company could repurchase up to $500 million worth of its shares.

During last three quarters of fiscal 2016, the company repurchased shares worth ~$380 million, and by the end of May 2016, the company had ~$120 million under its share repurchase program.

In the next article, we’ll look at the valuation multiples of Darden Restaurants and its peers.

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