Yahoo Finance McDonald's Corp's Dividend Analysis
Exploring the Sustainability and Growth of McDonald's Dividends
McDonald's Corp (NYSE:MCD) recently announced a dividend of $1.67 per share, set to be paid on June 17, 2024, with the ex-dividend date on June 3, 2024. As investors anticipate this upcoming payment, it's essential to delve into the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, this analysis will explore the performance and sustainability of McDonald's Corp's dividends.
What Does McDonald's Corp Do?
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As the world's largest restaurant owner-operator, McDonald's boasts system sales of $130 billion in 2023, spanning nearly 42,000 stores across 115 markets. The company has pioneered the franchise model, expanding its global presence through partnerships with independent and master franchisees. Approximately 60% of its revenue derives from franchise royalty fees and lease payments, with the remaining from its company-operated stores spread across its three core segments: the United States, internationally operated markets, and international developmental/licensed markets.
A Glimpse at McDonald's Corp's Dividend History
Since 1977, McDonald's Corp has maintained a consistent dividend payment record, with distributions occurring quarterly. The company is recognized as a dividend aristocrat, having increased its dividend annually for the past 47 years. Below is a chart illustrating the annual Dividends Per Share to track historical trends.
Breaking Down McDonald's Corp's Dividend Yield and Growth
Currently, McDonald's Corp has a 12-month trailing dividend yield of 2.46% and a forward dividend yield of 2.58%, indicating expected dividend increases over the next year. Over the past three years, the company's annual dividend growth rate was 7.30%, which slightly increased to 7.60% over a five-year period. The 5-year yield on cost for McDonald's Corp stock is approximately 3.55% as of today.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio stands at 0.53 as of March 31, 2024, suggesting that McDonald's retains a significant portion of its earnings for future growth and potential downturns. The company's profitability rank is 9 out of 10, reflecting strong earnings prowess relative to peers, with consistent positive net income over the past decade.
Growth Metrics: The Future Outlook
McDonald's Corp's growth rank of 9 out of 10 suggests a promising growth trajectory. The company's revenue per share and 3-year revenue growth rate of 10.80% annually outperform approximately 57.96% of global competitors. Additionally, its 3-year EPS growth rate of 25.40% per year and 5-year EBITDA growth rate of 9.70% further underscore its robust financial health.
Conclusion
Considering McDonald's Corp's consistent dividend increases, a stable payout ratio, and strong profitability and growth metrics, the company's dividend payments appear sustainable and poised for future growth. Investors seeking to explore other high-dividend yield opportunities can utilize the High Dividend Yield Screener available to GuruFocus Premium users.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
