With uncertainty and volatility roiling financial markets, many investors are looking for stocks that pay dividends. And few, if any, pay as big a distribution as small-cap stock %DineBrands (NYSE: $DIN).
Based in Pasadena, California, Dine Brands operates three well-known full-service restaurant chains: Applebee’s, International House of Pancakes (IHOP), and Fuzzy’s Taco Shop.
The company has been a going concern since 1958 and today boasts nearly 4,000 restaurant locations.
With a market capitalization of only $373 million U.S., Dine Brands is best described as a micro-cap stock, a term used for the smallest publicly traded companies.
However, there’s nothing tiny about the dividend. Dine Brands currently pays a quarterly distribution to shareholders of $0.51 U.S. per share, giving it a gigantic yield of 8.54%.
Consider that the average dividend yield among much larger companies listed in the benchmark S&P 500 index is 1.25% and Dine Brands payout looks very impressive indeed.
The stock itself hasn’t set the world on fire. Over the past five years, the share price has declined 44%, including a 20% drop so far in 2025.
However, with a price-to-earnings (P/E) ratio of 6.62, DIN stock looks woefully undervalued at current levels, presenting an opportunity for investors to get a big dividend payer on the cheap.
Analysts say that the stock has struggled since the Covid-19 pandemic, when its restaurants were forced to close or operate at reduced capacity.
The pandemic left Dine Brands with flat same-store sales and saddled with $1.63 billion U.S. of debt. The high debt level has raised some questions about the sustainability of the dividend.
However, management has said they remain committed to the quarterly distribution and are working to pare down the debt load and grow the business.
To that end, Dine Brands recently refinanced $600 million U.S. in fixed rate notes and a $325 million U.S. revolving credit facility.
Like many stocks of its size, Dine Brands carries some risks. But the valuation, and dividend payout in particular, make this a risk-reward scenario worth considering.
DIN stock is currently trading at $23.88 U.S. per share.
