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Top Quartile Ranked Dividend Stock YUM Becomes Oversold

By Dividend Channel Staff, Monday, June 4, 11:33 AM ET
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The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics strong fundamentals and a valuation that looks inexpensive. Yum! Brands, Inc. (NYSE:YUM) presently has an excellent rank, in the top 25% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.

But making Yum! Brands, Inc. an even more interesting and timely stock to look at, is the fact that in trading on Monday, shares of YUM entered into oversold territory, changing hands as low as $62.77 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In the case of Yum! Brands, Inc., the RSI reading has hit 28.4 by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 40.3. A falling stock price all else being equal creates a better opportunity for dividend investors to capture a higher yield. Indeed, YUM's recent annualized dividend of 1.14/share (currently paid in quarterly installments) works out to an annual yield of 1.77% based upon the recent $64.70 share price.

A bullish investor could look at YUM's 28.4 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on YUM is its dividend history. In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.

YUM Dividend History
Date Div*
04/11/12 0.285
01/11/12 0.285
10/12/11 0.285
07/13/11 0.250
04/13/11 0.250
01/12/11 0.250
10/13/10 0.250
07/14/10 0.210
04/14/10 0.210
01/13/10 0.210
10/14/09 0.210
07/15/09 0.190
04/07/09 0.190
01/14/09 0.190
10/15/08 0.190
07/09/08 0.190
04/09/08 0.150
01/09/08 0.150
10/10/07 0.150
07/11/07 0.150
03/07/07 0.150
01/10/07 0.075
10/11/06 0.075
07/12/06 0.075
04/11/06 0.058
01/11/06 0.058
10/12/05 0.058
07/13/05 0.058
04/13/05 0.050
01/12/05 0.050
10/13/04 0.050
07/14/04 0.050
* Data may be adjusted for splits; we are not responsible for data errors; always verify data with the company.

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According to the ETF Finder at ETF Channel, YUM makes up 5.12% of the Dynamic Food & Beverage Portfolio ETF (AMEX:PBJ) which is trading lower by about 0.2% on the day Monday.

See what other ETFs contain YUM
See what other stocks are held by PBJ

This Article's Word Cloud:   Account   Brands   Channel   Definition   Dividend   ETFs   Importance   Index   Monday   Portfolio   Relative   Stock   Strength   What   afterLeftLabels   always   below   bullish   changing   chartBackgroundColor   coverage   currently   data   dividend   escape   fillColor   formula   history   interesting   investors   judging   look   most   other   oversold   price   reading   recent   share   stock   stocks   technical   territory   that   trading   universe   what   which   with   yield

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