Our analysis is based on comparing Sonic Corp. with the following peers – Wendy’s Company, Jack in the Box Inc., Carrols Restaurant Group, Inc., McDonald’s Corporation, Denny’s Corporation and Good Times Restaurants Inc. (WEN-US, JACK-US, TAST-US, MCD-US, DENN-US and GTIM-US).
Sonic Corp.’s dividend yield is 2.45 percent and its dividend payout is 35.33 percent. This compares to a peer median dividend yield of 2.13 percent and a payout level of 34.87 percent. This type of dividend performance might make it a good stock for dividend investors. In addition, the company’s relatively good dividend quality score of 75 out of a possible score of 100 points to some sustainability of its robust payout ratio, and underscores its attractiveness for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to May 31, 2017), SONC-US paid a high quality dividend, which represents a yield of 2.32% at the current price.
- Dividends were paid for 2 of the last five years — all of them were also of high quality.
- The ending cash balance, with a dividend coverage of 2.67x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to May 31, 2017), SONC-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.75x), investing cash flow (coverage of 1.08x), issuance cash flow (coverage of -5.81x) and twelve-month prior cash (coverage of 4.66x), for a total dividend coverage of 3.67x.
SONC-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -7.05x). Thus, the total coverage including share buybacks is 10.73x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||0||0||0||1.36||1.59||2.45|
|Dividend Payout (%)||0||0||10.59||30||34.11||35.33|
A complete list of metrics and analysis is available on the company page.
Sonic Corp. operates and franchises a chain of quick-service restaurants. It also leases real estate and receives equity earnings in non-controlling ownership in a number of franchise drive ins. The company was founded by Troy N. Smith Sr. in 1953 and is headquartered in Oklahoma City, OK.
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