Where does McDonald’s rank after its 6% announced dividend increase?

top-100

McDonald’s is one of the largest restaurant companies in the world. It generates revenue primarily through it company-owned restaurants and franchise royalties. There are nearly 36,600 locations in 120 countries for the fast-food giant. 6,000 of these are company units while the rest of run by franchise. McDonald’s Corporation (MCD) announced a regular quarterly dividend of $0.94, a 6 percent increase from the prior rate of $0.89 per share.

The dividend will be paid at the new higher rate on December 15, 2016, to shareholders of record at close of business on December 1, 2016. McDonald’s is currently priced at $115.36. McDonald’s is a member of the top 100 dividend candidates.

Listed in the table below are the quarterly dividend payments since 2010. Our analysis of McDonald’s Corp. as a Top 100 Dividend Stock candidate is listed below;

Date Quarterly Dividend
12/1/2016 0.94
6/2/2016 0.89
2/26/2016 0.89
11/27/2015 0.89
8/28/2015 0.85
5/28/2015 0.85
2/26/2015 0.85
11/26/2014 0.85
8/28/2014 0.81
5/29/2014 0.81
2/27/2014 0.81
11/27/2013 0.81
8/29/2013 0.77
5/30/2013 0.77
2/27/2013 0.77
11/29/2012 0.77
8/30/2012 0.7
5/31/2012 0.7
2/28/2012 0.7
11/29/2011 0.7
8/30/2011 0.61
5/27/2011 0.61
2/25/2011 0.61
11/29/2010 0.61
8/30/2010 0.55
5/27/2010 0.55
2/25/2010 0.55

Analysis of McDonald’s Corp. is based upon our five key criteria for the Top 100 list, which include; 

Category Value Score
Dividend Yield 3.09 113
Dividend Growth (3-6 year avg) 6.8% 201
Forward P/E 18.31 261
S&P Financial Rating A++ 40
Beta 0.75 75
Total Score 690

Additional Information on P/S ratio and historical yield;

% Yield 3 Year Div. Growth Rate 6 Year Div. Growth Rate SPS 2016 P/S Ratio 10 yr P/S Low 10 yr P/S High 5 yr max Yield % 5 yr lowest Yield %
3.09% 5.40% 8.20% 29.15 3.96 1.63 3.96 3.68% 2.51%

Final Analysis;

  • McDonald’s dividend yield is higher than that of the S&P 500 Index and is also trading at midpoint of its average historical dividend yield.
  • McDonald’s maintains a 3 year dividend growth rate of 5.4%.
  • McDonald’s has paid out a dividend consecutively for the past 40 years.
  • McDonald’s is trading at the top of its average price/sales (P/S) range at 3.96.  From a relative valuation perspective, McDonald’s is overvalued based upon its historical trading history.
  • McDonald’s maintains a credit rating of A++. This is above investment grade, a positive.
  • McDonald’s maintains a beta of 0.75, lower than the average company.
  • McDonald’s total ranking is 69.

Based upon its high financial rating, low beta and high dividend yield, McDonald’s qualifies as one of our Top 100 Dividend Stocks. If you want to find out if a stock is in our model portfolio please subscribe to our monthlynewsletter.  

McDonald’s Corp. Dividend Yield Chart (Click to enlarge)

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Chart Explanation:  Dividend growth stocks may be viewed favorably when the current yield is above historical readings for the past 5 years.

Further information on dividend investing and evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

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