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Is DineEquity (DIN) a Superior Dividend Stock to Invest In?

DineEquity Inc. DIN owns and operates Applebee’s and IHOP restaurants.  The company is not generating the same level of revenues it did in 2009.  However, the company has grown its net income by over 300% since then.

The company stands to improve its sales numbers, but it has been doing well on the profitability front, with operating margins of 34.3%.  The industry’s net margin is just 4.95% compared to DIN’s 15.35%.  Clearly, the company has some advantages over its peers.  In spite of having superior measures of profitability, the stock is relatively cheap, trading at a forward PE of just 13.64.

The company has beaten our EPS consensus estimate every quarter since September of 2011.  Last quarter, DIN beat our earnings estimate by 18.66%.  The graph below does a great job of showing DIN’s track record with regards to beating earnings expectations on a quarterly basis

What’s really amazing about DineEquity is its 4.3% dividend yield.  DIN provides a whole lot of income for its investors, and it has been raising its payout to shareholders consistently since 2013.  The company’s dividend has grown by 22.67% since 2014, and the best part about its dividend is how sustainable it seems to be.  This is a reliable dividend stock because it has more than enough cash flows to keep paying out.  Free cash flows have been north of $125 million for over 4 years, which is more than enough to sustain the current 4.3% yield.     

Bottom Line:

DineEquity trades at a reasonable multiple, enjoys superior profit margins, and has a reliable dividend with a high yield.  It also has a great track record for surpassing our EPS consensus estimate.  The stock looks like a great one to buy and hold onto for the long run.

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DINEEQUITY INC (DIN): Free Stock Analysis Report
 
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