Musings on McDonald’s Dividend

McDonald’s Corp (MCD) announced that its domestic U.S. sales dropped 4% in February. That’s bad. Really bad. And it probably won’t get better for a while. A battleship this size cannot turn on a dime, and McDonald’s will have a hard time reinventing itself as the healthy Chipotle (CMG) of fast-food burger joints. But while McDonald’s has its problems, it’s commitment to shareholders is hard to match.

The dividend growth numbers are almost ridiculous. After growing its dividend at a 23% annual clip over the past 10 years, long-term investors now enjoy a yield on their original cost of 27.1%. The rate of dividend growth has slowed in recent years, and I don’t expect to see annualized growth anywhere near those historical levels again. But they show that McDonald’s is committed to its shareholders, and I have no doubt that management will find a way to continue growing the dividend in the years ahead, even if it is at a more modest 5% per year.

Source: Guru Focus

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