Call Us Toll Free: 1-800-388-9993
The Recently Recommended Monthly Stock Special
Recently Recommended

The recently recommended company is *Yum! Brands, Inc. (YUM)...

Comparison YUM (recently recommended stock of the month) vs SP500 (by Vanguard SP500 Index Fund) in the last 10 years.

Company Information:

Created in May 30th, 1997 and based in Louisville, Kentucky, YUM! Brands Inc. (YUM) is one of the world's largest fast food restaurant companies, which develops, operates and franchises the licensed brands Taco Bell, KFC, Pizza Hut and WingStreet worldwide. As of February 21, 2017, it operated approximately 43,500 restaurants in 135 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. Its current total market capitalization of $22.8 billion makes YUM a large cap stock (large capitalization) with a history of consistent revenues and earnings growth. It is considered a solid and well diversified business with wide economic moat and sustainable competitive advantage over rivals, which also enjoys a solid corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $2.72 per share the current year, and to go to net about $3.13 next year. YUM! Brands Inc. has paid dividends to investors since 2004, and has increased its payments for 12 consecutive years. During the past five years it has increased its dividends at an average rate of 10.2%, and its quarterly payment of $0.30 currently provides a yield of 2.70%.

 

The value of dividends reinvestment: A hypothetical investment in YUM! Brands has grown cumulatively (including dividends reinvested) 1,424.20% since September 1997. However, if you remove dividend reinvestment from the equation, the same hypothetical investment would have grown only 1,080.14% during the same period of time. The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 46%, which means the company is paying out 46% of all its net income in dividends, and is retaining a large percentage of earnings to reinvest or grow the business. Its Price to Earnings ratio (a measure of valuation) of 25.8 is slightly below its industry average and according to Morningstar, the stock is trading 11.1% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon. Technically (from the chart’s perspective) YUM also looks attractive, trading 7.2% below its all-time high, while it is forming a long price consolidation pattern between $69 and $46 approximately, in which $46.4 is acting as a strong technical support level.

 

The actively managed no-load mutual funds T. Rowe Price Capital Appreciation (PRWCX) and T. Rowe Price Blue Chip Growth (TRBCX) are major shareholders of YUM, holding 0.83% and 0.62% of its shares respectively. The stock is also one of the 63 holdings of the mutual fund managed my Moneypaper Advisors, the MP 63 Fund (DRIPX). YUM’s main competitors in the world are McDonald's Corp. (MCD), Starbucks Corp. (SBUX) and Compass Group PLC ADR (CMPGY). Its dividend re-investment plan charges some fees for cash investing and dividend reinvesting ($2.50, plus 10 cents per share). To illustrate those fees: for example, a $100 investment at YUM’s current price would cost a fee of $2.65 or 2.65% of the investment), while a $500 investment would cost about $3.28 or 0.66% of the investment. To minimize the effect of such fees, you may want to invest a larger amount even if that means that you can invest less frequently. With the stock being fundamental and technically attractive, this company offers long-term investors the opportunity to own a leading business with a strong record of delivering shareholder returns and solid strategic execution.

 

 

Would you like to enroll in the DRIP of this company?

Click here to order enrollment online.