7 Best Restaurant Dividend Stocks to Buy

3. Yum! Brands, Inc. (NYSE:YUM)

Number of Hedge Fund Holders: 35

An American multinational fast-food holding company, Yum! Brands, Inc. (NYSE:YUM) ranks third on our list of the best dividend stocks from the restaurant sector. It is one of the biggest players in the fast food industry, with a portfolio that includes top fast food chains like KFC, Pizza Hut, and Taco Bell. The company recently reported its second-quarter 2024 earnings that showed declines in same-store sales for both Pizza Hut and KFC. According to the company’s CEO, the Middle East conflict and a more cost-conscious consumer have posed challenges to same-store sales. Around 200 of Yum’s restaurants are temporarily closed in the Middle East, Malaysia, and Indonesia. However, he noted that sales trends in the U.S. have shown improvement compared to the previous quarter, largely due to value meals like Pizza Hut’s $7 Deal Lovers. The stock surged by 2.65% on August 6, after announcing its quarterly earnings and year-to-date, its returns came in at over 6%.

Taco Bell experienced a 5% increase in same-store sales for the quarter. With most of its locations in the U.S., Taco Bell’s focus on value has helped it navigate the slowdown in consumer spending. The chain saw growth in same-store sales across all income groups. Yum! Brands, Inc. (NYSE:YUM) aims to boost profitability for its Taco Bell division by expanding the use of artificial intelligence in drive-thru lanes. By the end of the year, it plans to implement this technology across hundreds of Taco Bell locations in the U.S.

Yum! Brands, Inc. (NYSE:YUM)’s balance sheet reflects a robust cash position, making it attractive to income investors. As of the latest quarter, it holds $680 million in cash. Over the past twelve months, its operating cash flow reached $1.62 billion, while its levered free cash flow was $1.17 billion. In addition to this, the company has been growing its dividends consistently for the past seven years, which makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.67 per share and has a dividend yield of 1.96%, as recorded on August 6.

Insider Monkey’s database of Q1 2024 indicated that 35 hedge funds held stakes in Yum! Brands, Inc. (NYSE:YUM), up from 33 in the previous quarter. These stakes are collectively valued at over $584.4 million. With more than 1.4 million shares, Cantillon Capital Management was the company’s leading stakeholder in Q1.