Yum! Brands

Yum! Brands (YUM - Analyst Report) is a solid Growth and Income pick that offers a dividend yield of 2.5% and a excellent history of positive surprises on earnings estimates. For 2009, analysts are calling for earnings per share growth of about 10%. The company has outperformed the Dow Jones ($DJI), S&P 500 (SPX) and NASDAQ (COMP) for the year.

Company Description

Yum! Brands is the world's largest restaurant company in terms of system restaurants with more than 35,000 restaurants in more than 110 countries and territories. Four of YUM’s restaurant brands, KFC, Long John Silver's, Pizza Hut and Taco Bell, are the global leaders of the chicken, quick-service seafood, pizza and Mexican-style food categories. A&W Restaurants is the longest running quick-service franchise chain in America.

The company, which is based in Louisville, Kentucky, saw more than $10 billion in total revenues in 2007, including company sales and franchise fees.

Competitive Income Payouts

The company recently declared a dividend of 19 cents per share, noting that it will be distributed February 6, 2009, to shareholders of record at the close of business on January 16, 2009.

YUM stated that it has nearly quadrupled its quarterly dividend since the initiation of dividends in May 2004.

The company’s dividend yield of 2.5% stands high above the industry average as the majority of YUM’s peers pay no dividends.

Robust Growth

The company’ third-quarter results included worldwide system-sales growth of 10% and mainland China unit growth of 21%. YUM said its worldwide same-store-sales growth of 3%, marks its 20th consecutive quarter of global same-store-sales growth.

Earnings per share of 58 cents topped the year-prior 50 cents and exceeded the consensus estimate by 7.41%. YUM’s earnings per share have been, on average, about 7.6% ahead of analyst estimates over the past 5 straight quarters.

Strong Record of Beating Expectations

YUM has an excellent record of exceeding analyst earnings estimates dating back to February 2004. During the most recent 5 consecutive quarters, the company topped forecasts by an average of 6%.