Pro Analysis

Buy Dunkin' Brands because it may raise its dividend, share buyback: RBC says

Dunkin Donuts
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Investors should buy Dunkin' Brands shares because the company's earnings next year will come in above current expectations, according to RBC Capital Markets, which upgraded the Dunkin' Donuts-owner to outperform from sector perform.

"We are increasing our target to $64 and upgrading Dunkin … largely based on our outlook for improving franchisee profitability and improved long-term unit and EPS growth," analyst David Palmer wrote in a note to clients Monday. "In addition, we see upside from potential cash back to shareholders — either through accelerated buybacks or a higher dividend payout."

The company currently has a 2.3 percent dividend yield, according to FactSet.