Frisch's Hikes Dividend - Analyst Blog

Frisch's Restaurants Inc. (FRS), a full-service restaurant company that operates under the name of Frisch's Big Boy, recently announced its decision to hike quarterly dividend by 2 cents to 15 cents per share. This translates into a 15.0% increase from the prior dividend. The increased dividend will be paid on October 8, 2010, to stockholders of record on September 20, 2010. This represents the 199th consecutive quarterly dividend paid by Frisch's Restaurants and brings the new forward annual dividend yield to 3.1% as of September 10, 2010.

 

Frisch's Restaurants has further enhanced shareholder value through a share-buyback program. On January 6, 2010, Frisch's Restaurants' board of directors authorized a new repurchase program under which the company may buy back up to 500,000 shares of its common stock over a two-year period. The company repurchased 46,468 shares for a total of $1.0 million in the fourth quarter of fiscal 2010.

 

Frisch's Restaurants has a consistent track record of paying quarterly dividends, supported by its cash position. The last dividend hike of 8% to 13 cents was announced on September 2, 2009. The company has reported profits every year since it went public in 1960, and has paid cash dividends to shareholders every quarter over the same period.

 

One of Frisch's Restaurants' peers, Columbus-based Bob Evans Farms Inc. (BOBE), recently hiked its quarterly dividend by 2 cents to 20 cents, which translates into an 11.1% increase.

 

Another peer of the company, Brinker International Inc. (EAT) increased its quarterly dividend by 27% to 14 cents per share on March 26, 2010.

 

Frisch's Restaurants' forward annualized dividend yield of 3.1% inched past Bob Evans' forward annualized dividend yield of 2.9% as well as the industry average of 1.6%, matching that of Brinker's.

 

Although Frisch's Restaurants' liquidity declined in the fourth quarter by $251.5 million, cash balance remained sound at $647.3 million. We believe the company has enough cash and cash equivalents to provide optimum shareholder value.

 

We appreciate the effort of Frisch's Restaurants to consistently enhance shareholder returns even in times of an economic downturn. We believe that an increase in dividend payment affirms the company's optimistic outlook and depicts that it is heading toward future growth.