Today, Yum Brands Inc. (YUM) raised its quarterly dividend by 18%, the current dividend yield is close to 2%. Yum Brands has been performing well, especially in China, despite the slow-down in economic growth.

Yum Brands China US India and other regions model

“Yum’s consistent performance and substantial free-cash-flow generation allows us to return significant cash to our shareholders through a meaningful quarterly dividend and share buybacks,” states Chief Executive David Novak.


Robert Baird analysts just came back from a trip to China. The analysts focused on Yum! Brands, Inc. (NYSE:YUM)’s performance in the world’s largest country by population.

They note that presentations and market visits with key leaders from China and the Asia Franchise Business Unit (combined 50%+ of global profits) with greater appreciation of the key advantages that can allow Yum! Brands, Inc. (NYSE:YUM) to continue to strengthen its leading position in China (by leveraging unparalleled scale/support infrastructure) and other key emerging growth markets (by attracting high-quality franchisees to operate powerful brands within a proven system).

Operating from a position of strength in China

The competitive gap in China continues to widen, and Yum! Brands, Inc. (NYSE:YUM)remains committed to further strengthening its leading portfolio of brands (via an impressive array of internal sales drivers) while capitalizing on the key advantages afforded by the company’s unparalleled supply chain/support infrastructure (enabling first-mover advantage across many lower-tier cities). While presentations focused heavily on longer-term growth strategies (and not near-term operating trends), they are confident that recent enhancements to KFC (extending brand to new dayparts and usage occasions) and Pizza Hut (accelerating growth while improving unit-level ROICs) can allow the company to produce healthy performance in 2H12/2013, even amid a somewhat slower growth economy.

Leveraging strong operating partners across emerging growth markets

Although a smaller part of the overall profit mix today, the Asia Franchise Business Unit contains many of the key under-penetrated emerging growth markets (including Vietnam) that are supporting Yum Brands’s goal of doubling the pace
of net unit growth for the YRI segment over the next five years. With a strong portfolio of brands, good track record, and solid support infrastructure, they believe YUM is well positioned to attract high-quality franchise partners to grow the

Yum! Brands, Inc. (NYSE:YUM) is trading at $68.89, up 1.03% on the news.

(Disclosure: No position in any securities mentioned)