Pizza Pizza – Defensive Dividend Play?

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7.4% Dividend Yield paid monthly. / – 2.24% growth rate over 5 years. Wondering if this stock has been on your radar and how you would rate its risk factor and if you would use distributions to re-invest. (DRIP?)

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Asked on November 23, 2020 7:50 am
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The company prudently cut the distribution soon after the pandemic hit, which was a wise move. We definitely liked that.

However, what really concerns me is shrinking top and bottom line growth.

Company has a compound annual growth rate on earnings of 0.5% and revenue of 0.44% over the last 4 years.

It's only trading at 11 times earnings, so it looks somewhat like a value play. But the thing is, 11 times earnings is actually a high price to pay for a company that essentially hasn't grown its bottom line for nearly half a decade.

Then there's the consideration that the company's dividend makes up over 92% of earnings. When earnings aren't growing, this payout ratio is concerning.

Overall, I'm not a huge fan.

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Posted by Dan Kent
Answered on November 23, 2020 12:50 pm