Sunday, October 8, 2017
First Dividend Initiation
YUM China (YUMC), was spun off from YUM Holdings (YUM) in December of 2016. The split at first meant a lower payout combined, with YUM decreasing its dividend accordingly and YUMC not paying one. Some might take this as a good reason to sell one or both stocks, I did not. My mindset was to put YUMC on a clock, and see if they cannot rectify this situation. They did, my clock was about 1.5 years long. This past week they declared their first ever divided, unexpectedly to many.
YUMC's announcement was very exciting. Sure it is not a ton of cash - $0.10 per share (assumed to be quarterly), but it is a start. The yield should come out to be approximately 1.0%. The payout ratio will likely be very low (once past year numbers are fully tallied, we will have a better idea), hence there will be a lot of room to grow the payment. This is what matters when it comes to compound growth - time, patience, and growth!
Have you had a dividend initiated before, or are you sharing in this YUMC experience?
- Long O, YUM, and YUMC
On tap when writing: Victory Brewing (PA), Sour Monkey - 9.5% ABV. Biting sour flavor, not too heavy body. Been a big fan of sour beer of late.