Dunkin' Brands (DNKN) has struggled with its identity. The company dropped the word "Donuts" from its name even though it still sells the tasty pastries.

The coffee and pastry brand has tried to put more focus on its beverage business. That's a smart play from a margin point of view, but it places Dunkin' in between two giant competitors. At the higher end, the chain must battle Starbucks (SBUX -3.64%), and at the lower-priced end of the spectrum Dunkin' has to fend off McDonald's (MCD -0.03%), which often uses its McCafe brand as a loss leader.

That's a very tough position to be in, but the company has found ways to continue to grow. It also steadily pays a dividend, which should make it a brand that retirees at least take a look at.

The exterior of a Dunkin'.

Dunkin' has changed it name but not all of its stores have changed their signs. Image source: Dunkin'.

Is America running on Dunkin'?

The coffee chain has managed to grow in a number of ways during the most recent quarter. Same-store sales rose by 1.5% in the third quarter, while revenue was up by 17% and earnings per share grew by 8.9% to $0.86. Dunkin' also added 55 new U.S. locations in the quarter.

"U.S. performance was led by strength in premium beverages such as espresso and cold brew, along with sales of breakfast sandwiches driven by the success of our national Go2s value platform," said CEO David Hoffmann in the Q3 earnings release. "We believe these results demonstrate that our Dunkin' U.S. Blueprint for Growth is working and the strategic investments made into the Dunkin' business last year are enabling us to drive topline results and deliver a better guest experience."

It's a slow plod that has produced solid if unremarkable results. The company expects similar "low-single-digit comparable store sales growth for Dunkin' U.S. and flat to slightly negative comparable store sales growth for Baskin-Robbins U.S." It also expects to add 200 to 250 new Dunkin' stores in the U.S. for the entire fiscal year.

Paid for patience?

Dunkin' management deserves credit for making a lot of small changes. The company has focused on technology, efficiency, and improving its in-store experience. Those aren't dramatic changes that shareholders or even consumers notice, but they improve the perception of the brand among customers.

Company leadership clearly understands that the brand has to carve out a niche where it offers value compared to Starbucks and a better experience/product than McDonald's. That's a pretty narrow market to operate in, but Dunkin' has done a good job threading that needle.

Because there's no quick path to huge growth, the company has been putting some of its revenue back into the hands of shareholders. In Q3 it returned $45.7 million in capital that benefits shareholders -- $31 million through dividends and $14.7 million through share repurchases. It has already announced that its dividend will continue at a rate of $0.3750 per share, which was paid in mid-December.

Is Dunkin' right for a retiree's portfolio?

There's some risk here, and that keeps it from being a dream stock. The company could be squeezed on either side of its business by Starbucks, McDonald's, or any of the countless other players in the coffee space. To its benefit, the company has a loyal core customer base that gives it a bit of a moat when it comes to a major drop in business.

Dunkin' offers solid value and decent prospects going forward. Its dividend makes it attractive to retirees, but the company has not shown that it can truly accelerate its growth. This isn't a bad stock to have in your retirement holdings, but it's not a dream stock or a clear long-term performer.