Yum China (YUMC) Earnings Preview: Dividend Potential and Investment Strategy
Get ready for a potential earnings boost from Yum China Holdings, Inc. (YUMC), the parent company of popular fast-food chains KFC, Pizza Hut, and Taco Bell in China. The company is scheduled to announce its third-quarter earnings before the market opens on Monday, November 4, and analysts are expecting a strong performance.
Analysts predict Yum China will report earnings of 67 cents per share for the quarter, representing a healthy increase from 59 cents per share in the same period last year. Furthermore, revenue is projected to reach $3.05 billion, surpassing the $2.91 billion generated in the prior year, according to data from Benzinga Pro.
Yum China’s recent performance has been noteworthy. In its second-quarter results released on August 5, revenue climbed 1% year-over-year to $2.68 billion, though slightly missing the consensus estimate of $2.77 billion. Despite this, the company’s dividend yield has caught the eye of investors seeking regular passive income.
Capitalizing on Yum China’s Dividend Yield
Yum China currently offers an annual dividend yield of 1.45%, translating to a quarterly dividend of 16 cents per share (64 cents annually). This presents an opportunity for investors to generate consistent passive income. Here’s a breakdown of how much you would need to invest to earn specific monthly dividend amounts:
*
$500 per month ($6,000 annually):
An investment of approximately $413,531 or around 9,375 shares would be required.*
$100 per month ($1,200 annually):
You would need to invest around $82,706 or approximately 1,875 shares.Calculating Your Investment:
To determine the necessary investment amount, divide your desired annual income by the annual dividend per share (64 cents in this case):
*
For $6,000:
$6,000 / $0.64 = 9,375 shares*
For $1,200:
$1,200 / $0.64 = 1,875 sharesImportant Considerations:
It’s crucial to remember that dividend yield can fluctuate over time, as both dividend payments and stock prices are subject to change. This means that your potential income stream from dividends is not guaranteed and can vary depending on market conditions.
Understanding Dividend Yield:
Dividend yield is calculated by dividing the annual dividend payment by the stock’s current price. For example, a stock paying an annual dividend of $2 and trading at $50 would have a dividend yield of 4% ($2/$50). However, if the stock price increases to $60, the yield drops to 3.33% ($2/$60). Conversely, a decrease in the stock price to $40 would result in a higher yield of 5% ($2/$40). Changes in the dividend payment itself can also impact the yield. Increasing dividends generally lead to a higher yield, assuming the stock price remains constant. Conversely, a reduction in the dividend payment will result in a lower yield.
Yum China’s Share Performance:
Shares of Yum China closed at $44.11 on Thursday, down 1.3% for the day.
With the upcoming earnings release and the company’s attractive dividend yield, Yum China is a stock worth watching for investors interested in both potential capital appreciation and consistent passive income. However, as always, it’s important to conduct thorough research and consider your individual investment goals and risk tolerance before making any investment decisions.
