Restaurant Brands International Limited Partnership (TSE:QSP.UN) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Restaurant Brands International Limited Partnership's shares before the 21st of March to receive the dividend, which will be paid on the 4th of April.

The company's next dividend payment will be US$0.62 per share. Last year, in total, the company distributed US$2.48 to shareholders. Last year's total dividend payments show that Restaurant Brands International Limited Partnership has a trailing yield of 3.7% on the current share price of CA$95.18. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Restaurant Brands International Limited Partnership can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Restaurant Brands International Limited Partnership

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Restaurant Brands International Limited Partnership paid out 54% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 79% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Restaurant Brands International Limited Partnership's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Restaurant Brands International Limited Partnership paid out over the last 12 months.TSX:QSP.UN Historic Dividend March 17th 2025

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Restaurant Brands International Limited Partnership earnings per share are up 8.9% per annum over the last five years. Decent historical earnings per share growth suggests Restaurant Brands International Limited Partnership has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

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Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Restaurant Brands International Limited Partnership has lifted its dividend by approximately 21% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid Restaurant Brands International Limited Partnership? Earnings per share have been growing modestly and Restaurant Brands International Limited Partnership paid out a bit over half of its earnings and free cash flow last year. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Restaurant Brands International Limited Partnership's dividend merits.

If you're not too concerned about Restaurant Brands International Limited Partnership's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 2 warning signs for Restaurant Brands International Limited Partnership you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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