THI Quick Facts
- Stock Ticker: THI on both TSX and NYSE
- Market Cap.: 7.81B$
- P/E: 19.58
- Forward P/E: 16.797
- P/B: 6.69 (Price to Book)
- P/S: 2.51 (Price to Sale)
- P/CF: 11.58 (Price to Cash Flow)
- EPS: $2.58
- Beta: 0.18
- Liabilities to Equity Ratio: 0.88
- Quarterly Dividends: $0.21
- Dividend Yield: 1.66%
- Dividend Payout Ratio: 32.56%
- ROE: 35.03%
- 10 Year EPS Growth Average: 25.31%
- 10 Year Dividend Growth Average: 37.33%
- 52-Week Low: $45.11
- 52-Week High: $57.91
- 52-Week Range: 42.58%
THI Dividend Growth
In Tim Hortons, we have another 10/10 dividend growth candidate if they can keep it up for 4 more years. The chart below is simply marvelous, I can almost see a compound growth pattern developing. Pair that with its dividend payout ratio and the fact that we have a Canadian Dividend Aristocrats, THI is fitting the profile for dividend investors if you want to diversify in this sector.
Below is a table showing what a $5,000 investment would look like if you had invested with Tim Hortons (THI) 6 years ago. As you can see, the growth is mostly form the stock appreciation and not from the dividends as only 8 shares would have been bought over the time, but over time the dividend growth would show it’s compound growth ability. Six years is just not enough of a long period to see dividend at work.
THI Dividend Payout Ratio
THI has always been conservative on the dividend front. Keeping more of their cash for growth early and as their Canadian coverage became saturated, they started increasing their dividends to offset the growth I would assume. Their US exposure is small and it will probably take time to significantly grow their business as competition is different and the consumers are different So far, the payout ratio is in a very good range of safety.
THI EPS Growth
THI’s earnings per share is not stellar over the past 6 years. It’s not keeping up with the dividend growth and that can be a challenge over time. It’s not showing any troubles but past performance are not representative of future performance and it’s important to understand where it is going to grow those earnings.
I like their conservative approach to growing their dividends. They are definitely a recognized brand in Canada with a strong customer support for their coffee. I personally prefer the coffee at McDonald (MCD) which is reflecting how competitive the business Tim Hortons is in really is. Starbucks (SBUX) and McDonald (MCD) are far bigger than THI in the coffee business which means THI’s business need to continuously be strong.
Personally, I love their growth, their dividend growth, their payout ratio but I am held off by the stiff competition. It’s a small company compared with their competitors and they don’t have a stronghold on the market either. THI might have reached saturation in Canada with negative same store sales and they might initially be their own competition to growth.
Readers: Are you interested in THI? What’s your take on their future growth?
Full Disclosure: No position in THI at the time of writing. I do own MCD at the time of writing.
Disclamer: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your decision at your own risk – see my full disclaimer for more details.