Sunday, October 8, 2017

First Dividend Initiation

Self-Hazing Gremlin here to talk about initiation.  From the looks of it one may think I am talking about a college initiation with heavy drinking or something similar.  Rather I am talking about a dividend initiation.  I have experienced over 30 dividend increases this year already, and have had over 70 since 2014 without a doubt.  Some of those are as small as 0.2% (I appreciate the consistence Realty Income - O!), with others getting as high as 16+%.  However, I have never had a dividend initiated by a spun off company.  That all changed last week.

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?

- Gremlin
- 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.


  1. YUM/YUMC is a good choice. I've known people who travel around Asia and say that KFC has been growing a lot in China! Good purchase.

    Btw love Sour Monkey, solid choice in beer!


    1. CD,

      Sour Monkey is great indeed! I appreciate the thoughts on YUMC, I hear the same thing. Thanks for the comment.

      - Gremlin

  2. Thank for your very good article.! i always enjoy & read the post you are sharing!