Tuesday, November 10, 2015

Dividend raise: MCD

McDonald's announced today that they have raised their quarterly dividend from $0.85 to $0.89. That is a 4.7% increase over last year's values. It's not great but not terrible either in my opinion.

The company is undergoing a large makeover under the new CEO and I still expect earnings to be unexciting for several more quarters. The share prices have risen tremendously over the last several weeks though, not really in line with the present earnings. Investors seem to be confident about the future of McDonald's. At the moment, MCD is too expensive for me to consider buying.

S&P have also reduced MCD's credit rating from A- to BBB+ due to the added debt, which does not please me greatly.

MCD have also stated that they do not plan to pursue a REIT transaction that many were hoping for.

Links:
http://seekingalpha.com/news/2917626-mcdonalds-wont-pursue-reit

http://seekingalpha.com/news/2917706-mcdonalds-hikes-dividend-ups-refranchising-goal-sets-2016-targets-shares-rise

http://seekingalpha.com/news/2917886-s-and-p-cuts-mcdonalds-credit-rating


3 comments:

  1. I'm always happy with a 5% raise. It's more than I'll get from work this year. I don't think they ruled out the REIT initiative permanently, I think they put out it on the back burner for now. I have no idea if that would be good or bad for them either.

    ReplyDelete
    Replies
    1. The dividend raises are amazing in the end, even for my lower runners at 3% - 5%. It's like getting a pay raise every year!

      MCD with the 5% raise and 3% yield gives a dividend growth (with dividends reinvested) of around 8%. Not bad, as it's in line with the share price and earnings returns I wish to see in the future.

      So far all my companies this year on average did around 10-10.5% dividend increase. Not bad at all for not doing any work! The only one left I'm waiting on is BDX, and their dividend is paid in December.

      -YD

      Delete
  2. Great news...we own MCD and have to say this is music to our ears! After all, we purchase MCD when it was down in the low $90s so minus the dividend raise, we are already very happy with our purchase. :)

    Cheers for yet another raise without lifting a finger! AFFJ

    ReplyDelete