The company’s last dividend increase was in September 2012 when the Board of Directors approved a 10% increase to 77 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 19.50% to its shareholders.
The return on equity has expanded from 13.20% in 2003 to 36.80% in 2012. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 28.40% per year over the past decade, which is much higher than to the growth in EPS.
A 28% growth in distributions translates into the 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. I expect dividend growth to average 10%/year over the next decade.
The dividend payout ratio has increased from 34% in 2002 to 53.50% in 2012. 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.
Full Disclosure: Long MCD and YUM
Relevant Articles:
- Check the Complete Article Archive
- Nine Income Stocks Delivering Dividend Increases to shareholders
- YUM! Brands (YUM) Dividend Stock Analysis
- The World’s Best Dividend Portfolio
- Most Widely Held Dividend Growth Stocks
This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to my feed [RSS], or have future articles emailed to you [Email] or follow me on Twitter [Twitter].