Dividend stock and fast food chain Wendy’s (WEN) beat Q1 2023 estimates Wednesday morning, posting a profit of 21 cents per share, a penny above 20-cent expectations. Revenue of $528.8 million marked 8.2% year-over-year growth, beating estimates by $6 million.
Wendy’s also announced a 25-cent quarterly dividend, payable to shareholders on record June 15. The stock will go ex-dividend on May 31.
WEN stock does not have a steady track record of payout hikes but has caught investors’ attention, with the dividend doubling year over year. It now offers a juicy 4.3% annualized yield, more than twice the 2.1% yield of competitor and dividend aristocrat McDonalds (MCD), and far higher than the S%P’s 1.6% average yield.
The company also reaffirmed forward guidance, projecting continued growth. It earned 86 cents per share in 2022 and is estimated to post a 98 cent profit this year and $1.12 in 2024.
Shares of the dividend stock traded 1% higher on the news. Shares of Wendy’s are trading with a 86 Relative Strength Rating as shares form a flat base with a 23.88 buy point, as per MarketSmith.
Dividend Stock: Wendy’s Brings Artificial Intelligence To Drive Through
Exciting innovations are in the pipeline for this dividend stock, underpinned by Wendy’s rapidly-accelerating investment into its digital business.
The company just entered into an agreement with Alphabet (GOOG) to use artificial intelligence. The hookup will develop an AI chatbot to take customer drive-through orders. It will take some fine tuning but, with 80% of orders now placed through the drive-through lane, there is great potential for Wendy’s to lower costs and improve efficiency.
The future looks bright if Wendy’s can continue to hit or beat growth and income targets. Nevertheless, investors are taking on added risk with this dividend stock in return for hot growth prospects. Notably, the company is debt heavy, with reported total liabilities of $4.98 billion compared to just $5.40 billion of total assets.
This imbalance shows in the subpar (B) debt rating from S&P Global, signaling higher than investment grade risk that could impact dividend payouts in coming quarters.
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