Darden Restaurants (DRI) Shows Its Strength with Dividend Hike

Darden Restaurants raised its dividend again for the 8th consecutive year today by announcing a new quarterly dividend of $.50 per share or $2.00 per year. The new dividend is payable on August 1st with an ex-dividend date of July 25th. This gives Darden a dividend yield of 3.4%. The dividend increase should come as no surprise to investors who are used to seeing the company boost its dividend in the 3rd quarter. This new dividend is a 16.3% increase over the previous quarterly dividend.

Darden Dividend Fundamentals

DRI has fairly solid dividend fundamentals. The 8 consecutive years of dividend increases and 3.4% yield are very attractive. So is the low payout ratio of 46 and the three year net income ratio of 8%. DRI also has a 5 year dividend growth rate of 25%. The only number holding DRI back from a higher DSO rating is its low free cash flow yield of just 2%, which is lower than its dividend yield. After this dividend increase it seems that management is still confident it its ability to drive revenue and pay the dividend.

About Darden Restaurants

Darden owns and operates many different restaurant chains like Red Lobster, Olive Garden and LongHorn Steakhouse. In total the company owns over 1800 different restaurants in the US and Canadian. The company has a P/E ratio of 14.45 and a market cap just over $6B. In the last 12 months DRI stock is up 2%. It is up 8.75% so far in 2012.

Darden is not one of the top 100 stocks on our best dividend stocks list.