Texas Roadhouse, Inc. (TXRH) is gearing up to release its fourth-quarter earnings after the market closes on Thursday, February 19. But while everyone's focused on the earnings beat-or-miss drama, there's another angle worth exploring: the company's dividend.
Wall Street analysts are expecting quarterly earnings of $1.50 per share, which would represent a decline from the $1.73 per share reported in the same period last year. Revenue estimates sit at $1.5 billion, up from $1.44 billion in the year-ago quarter.
On the analyst front, Mizuho's Nick Setyan maintained an Outperform rating on February 12 and bumped up his price target from $190 to $200. That kind of confidence heading into earnings has some investors wondering whether Texas Roadhouse might offer more than just stock appreciation potential.
The Dividend Math
Right now, Texas Roadhouse offers an annual dividend yield of 1.46%, paying out $2.72 per share annually or 68 cents quarterly. That's not going to knock anyone's socks off compared to high-yield dividend plays, but for income-focused investors, it's worth understanding the numbers.
Here's the breakdown: To pocket $500 per month, or $6,000 annually, from Texas Roadhouse dividends alone, you'd need to invest approximately $412,235. That translates to roughly 2,206 shares.
If that sounds like a lot, scale it down: For a more modest $100 monthly or $1,200 per year, you'd need about $82,410 invested, or around 441 shares.
The calculation is straightforward: Take your desired annual income and divide it by the annual dividend. So $6,000 divided by $2.72 equals 2,206 shares for the $500 monthly target. Similarly, $1,200 divided by $2.72 gets you to 441 shares for the $100 monthly goal.
Understanding Dividend Yields
One important caveat: dividend yields aren't static. They fluctuate based on both the dividend payment and the stock price, which both move over time.
The dividend yield is calculated by dividing the annual dividend payment by the current stock price. For instance, if a stock pays a $2 annual dividend and trades at $50, the yield is 4%. But if that same stock climbs to $60, the yield drops to 3.33%. If it falls to $40, the yield jumps to 5%.
Changes in the actual dividend payment also affect the yield. When a company increases its dividend while the stock price holds steady, the yield rises. Cut the dividend, and the yield falls accordingly.
As of Wednesday, Texas Roadhouse shares closed slightly lower at $186.87. With earnings just around the corner, that price could move considerably, which would in turn affect the dividend math outlined above.
