McDonald’s Corporation (MCD), together with its subsidiaries, franchises and operates McDonald’s restaurants primarily in the United States, Europe, the Asia Pacific, the Middle East, and Africa. This dividend aristocrat has paid dividends since 1976 and increased distributions on its common stock for 35 years in a row. The company’s last dividend increase was in September 2011 when the Board of Directors approved a 14.80% increase to 70 cents/share. The company’s largest competitors include Yum Brands (YUM), Starbucks (SBUX) and Burger King (BKW). Over the past decade this dividend growth stock has delivered an annualized total return of 16.70% to its shareholders.
dividend payment doubling every two and a half years. If we look at historical data, going as far back as 1976 we see that McDonald’s has actually managed to double its dividend every three and a half years on average. The dividend payout ratio has increased from 31% in 2002 to 48% in 2011. The expansion in the payout ratio has enabled dividend growth to be faster than EPS growth over the past decade. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
is attractively valued at 16.80 times earnings, yields 3.10% and has an adequately covered dividend.
Full Disclosure: Long MCD and YUM
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