Dividend Aristocrat Overview: McDonald’s

About McDonald’s

McDonald’s is a leading foodservice retailer with global reach, operating and franchising restaurants under the McDonald’s label.  More than 4 out of every 5 McDonald’s locations are franchised and run by independent business people.  According to Forbes, as of November 2013 McDonald’s has the 6th most powerful brand in the world, with the value of the brand alone (not the full company) worth nearly $40 billion.

The company is a member of the S&P 500 and Dow 30 indices and is traded under the ticker symbol MCD.

McDonald’s Dividend and Stock Split History

McDonald’s became a Dividend Aristocrat in 2001 and has increased their dividends for the last 37 consecutive years.  In 2013, McDonald’s increased the quarterly dividend by 8.7%, from 77 to 81 cents per share.  The company has paid dividends since 1976 and began increasing the dividend in 1977.

McDonald’s has an outstanding record of compounding its annual dividend.  Over the last 5 years, the company has compounded its dividends at an annual rate of 13.94%.  Over 10 years the stock’s compounded dividend growth rate is 22.80% and over the last 13 years since McDonald’s became a Dividend Aristocrat, the compounded dividend growth rate is 24.50%.  This dividend growth rate means that McDonald’s stock dividend has nearly doubled every three years since the company became a Dividend Aristocrat in 2001.

Since 2008, McDonald’s has announced increases of the quarterly dividend in the 4th quarter of the calendar year.  Prior to that, from 2000 – 2007, McDonald’s paid a single dividend for the year in the 4th quarter.  Before 2000, McDonald’s would increase their dividend in the 1st quarter and maintain that payout in each quarter.

McDonald’s stock has split 12 times – six 2 for 1 splits and 6 3 for 2 splits – since 1966.  2 for 1 splits have occurred in May 1968, June 1969, June 1972, June 1989, June 1994, and March 1999.  The 3 for 2 splits have occurred in April 1966, June 1971, October 1982, September 1984, June 1986, and June 1987.  With a 2% stock dividend that was paid in April 1967, 1 share of MCD bought in early 1966 would now be 743.6 shares.  In fact, the single share purchased in 1966 would have become 18.36 shares paying a total of $3.21 in dividends in 1976, and then become 743.6 shares paying a total of $2,320 in 2013.

Direct Purchase and Dividend Reinvestment Plans

McDonald’s offers both direct investment and dividend reinvestment plans which are administered through Computershare.  There are some fees associated with both plans: a $5 initial fee, a $6 cash purchase fee and a $1.50 automatic investment fee (for automatic ongoing investments).  There are no dividend reinvestment fees.  The minimum initial investment is $500.

Information about the direct investment and dividend reinvestment plans are available at McDonald’s Investor Relations website.

Helpful Links

McDonald’s Investor Relations

Current quote and financial summary (finviz.com)