Unpacking McDonald's Corp's Dividend History, Yield, Growth Rates, and More
McDonald's Corp (MCD, Financial) recently announced a dividend of $1.52 per share, payable on 2023-09-18, with the ex-dividend date set for 2023-08-31. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into McDonald's Corps dividend performance and assess its sustainability.
Introducing McDonald's Corp
McDonald's is the largest restaurant owner-operator in the world, with 2022 system sales of $116 billion (by our estimates) across more than 40,000 stores and 115 markets. McDonald's pioneered the franchise model, building its footprint through partnerships with independent restaurant franchisees and master franchise partners around the globe. The firm earns nearly 60% of its revenue from franchise royalty fees and lease payments, with most of the remainder coming from company-operated stores across its three core segments: the United States, internationally operated markets, and international developmental/licensed markets.
A Look at McDonald's Corp's Dividend History
McDonald's Corp's dividend history showcases a firm commitment to rewarding shareholders. The company's Dividends Per Share has seen consistent increments over the years, indicating a solid dividend distribution approach. McDonald's Corp has increased its dividend each year since 1977, earning the title of a dividend aristocrat, an honor bestowed to companies that have consistently increased their dividend each year for at least the past 46 years.
Understanding McDonald's Corp's Dividend Yield and Growth
The company's 3-year and 5-year dividend growth rates illuminate its commitment to enhance shareholder returns. McDonald's Corp's dividend has changed by 6.20% per year on average over the past three years, a performance that outperforms approximately 64.81% of global competitors. Over the past five years, the company's dividend has increased by approximately 8.00% per year on average. Based on McDonald's Corp's dividend yield and five-year growth rate, the 5-year yield on cost of McDonald's Corp stock as of today is approximately 3.09% per year.
Assessing Dividend Sustainability: Payout Ratio and Profitability
When evaluating the sustainability of the dividend, the company's payout ratio is a critical factor. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, McDonald's Corp's dividend payout ratio is 0.55.
McDonald's Corp's profitability rank of 8 out of 10 as of 2023-06-30 suggests good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability. Additionally, the predictability rank of 2 stars out of 5 suggests that revenue and earnings growth of McDonald's Corp is not consistent.
McDonald's Corp's Growth Metrics: A Peek into the Future
For dividends to be sustainable, a company must exhibit robust growth metrics. McDonald's Corp's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average increase of approximately 3.80% per year, a rate that outperforms approximately 68.28% of global competitors. McDonald's Corp's 3-year EPS growth rate and 5-year EBITDA growth rate further underline its growth potential, outperforming approximately 44.64% and 59.55% of global competitors, respectively.
Concluding Thoughts
With a consistent dividend payment history, robust dividend growth rate, a healthy payout ratio, and promising profitability and growth metrics, McDonald's Corp presents a compelling case for dividend investors. However, the company's inconsistent revenue and earnings growth warrant caution. As always, investors should conduct their due diligence before making investment decisions.
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