Will Chipotle Ever Pay A Dividend?

The COVID-19 crisis has created many winners and losers as the world’s consumers reset some behaviors, and accelerated the shift to digital. That has occurred in industries like retail, but also in restaurants, with the chains with heavy digital presences in place before the crisis thriving, while others simply try to keep up.

One of the restaurant stocks firmly in the former category is Chipotle Mexican Grill (CMG), as shares have gained more than 50% in 2020, and are up more than 200% since the bottom in March. Chipotle has shown the ability to grow rapidly in a variety of environments, and that has generated huge returns for shareholders over time. However, Chipotle doesn’t pay a dividend to shareholders.

Chipotle is relatively unique in this regard, as many large restaurants have begun to pay dividends to shareholders. Some have done so for a very long time. For example, McDonald’s (MCD) is the largest publicly-traded restaurant in the world, and it has raised its dividend for over 40 years in a row. McDonald’s is a Dividend Aristocrat, a group of 65 stocks in the S&P 500 with 25+ consecutive years of dividend increases.

Chipotle does not pay a dividend for now, but this could change at some point. Like McDonald’s, Chipotle is highly profitable with strong cash flow and one of the top brands in the industry.

In this article, we’ll take a look at Chipotle’s business model to see if the company will ever pay a dividend.

Business Overview

Chipotle is a very large restaurant chain by any measure, having grown by leaps and bounds since its founding in 1993. The company owns and operates over 2,700 restaurants, with the vast majority being in the US, but Chipotle has expanded internationally as well to select markets. Chipotle is unique in that it does not franchise; it owns every one of its restaurants.

The company serves Mexican food with a small menu that is highly customizable by the user, boosting its appeal over chains with fixed menus. Chipotle prides itself on responsibly sourced, sustainable ingredients without artificial preservatives or other processing techniques.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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