Bob Evans Farms Inc. (BOBE), a full-service restaurant company that operates under the brands Bob Evans and Mimis Cafes, recently announced its decision to hike quarterly dividend by 2 cents to 20 cents. This translates to an 11.1% increase from the prior dividend of 18 cents. The increased dividend will be paid on Sep 21, 2010, to stockholders of record on Sep 7, 2010. This brings the new dividend yield to 3.1% from 2.8%. Bob

Evans further enhanced shareholder value by repurchasing 170,000 shares for a total of $4.4 million in the first quarter of fiscal 2011 and reduced its debt by $8.9 million to $181.3 million. The company’s board has also authorized an additional share repurchase of up to $25 million in 2011.

Based in Columbus, Ohio, Bob Evans has a consistent track record of paying quarterly dividends, supported by its cash position and its ability to generate healthy cash flow. The last dividend hike of 12.5% to 18 cents was announced on Nov 19, 2009. The company has increased its dividend payout from 10 cents in 2002 to the current 20 cents in 2010, a total dividend growth of 100% over the years.

One of Bob Evans’ peers, Brinker International Inc. (EAT) with its intention to boost shareholder value on Mar 26, 2010, increased its quarterly dividend by 27% to 14 cents per share from 11 cents per share, effective from the fourth quarter of 2010. Bob Evans’ current annualized dividend yield of 3.1% outpaces Brinker’s annualized dividend yield of 0.9%. Bob Evans’ dividend payout ratio of 48.78% is higher than Brinker’s 31.82%.

Bob Evans is rich in cash and is armed with cash and cash equivalents of $17.8 billion as of Apr 30, 2010, further consolidating the fact that the company is in a strong cash position and has the ability to provide a sound value to its shareholders.

We appreciate Bob Evans’ effort to consistently enhance shareholder return even in times of a recessionary economy. Moreover, we believe that the increase in dividend payment by the company depicts the fact that the company is in good shape and is well positioned for future growth.

We have a Zacks #3 Rank (short-term Hold recommendation) on Bob Evans.
 
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