While consumers have started to cut back on discretionary spending amid higher prices, one area where they continue to open their wallets remains dining out experiences. Call it a post-COVID pushback, but getting out of our homes and eating at restaurants has continued to score the lion’s share of consumer dollars. For firms that operate in the sector – like our latest Best Dividend Capture Stocks List pick – it can mean strong cash flows and dividend growth.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
Our pick is one of the largest restaurant firms in the country, owning and operating several chains with over 1,800 locations. This scale puts its eateries in the bulk of American cities and towns. Given the trends toward dining out, our pick continues to see plenty of revenue growth in the post-pandemic years. Moreover, its large size allows our pick to see considerable cost savings on ingredients, labor and other necessities for its business. The combination of high sales and above-average margin has resulted in solid profit and cash flow numbers for the firm.
Our pick has continued to grow as well. The firm has used M&A to find specialty niche chains that it can quickly scale to add to its mix. Several high-profile buyouts have quickly turned into serious revenue generators for the firm. At the same time, it’s more than willing to sell non-performing concepts to other operators. The firm has also been smart at expanding its digital and online ordering operations, as well as offering value price-point menus at several of its key chains. This has helped keep more price-conscious consumers coming to its establishments during this high inflationary period.
The combination of steady demand, scale and growth elements has made our pick a cash flow machine. And, in that, it’s rewarded shareholders and evolved into a great dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Tuesday, April 9, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 7 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest restaurant stock could be a lucrative option.
