We received US$79.56 (84.64 shares x 94 cents) from McDonalds Corp (MCD). This is the 2nd quarter that McDonalds paid dividends at 94 cents per share. On YoY basis, stock price is up by 40% as investors have been optimistic in its earnings report. Throughout 2016, actual quarterly earnings have been beating analyst estimates. Despite 2016 revenues reported a -3% YoY decrease, 2016 net income ended up +3% from last year at US$4.6bn, due to operational efficiency and cost-cutting measures.
Due to the increasing stock price, the dividend yield is on a downward trend. The dividend yield is +2.8% which is near to a 5yr low. Dividend yield indicates the company’s dividends payout relative to stock price to investors.
The dividend payout ratio is 0.66. The downtrend in the dividend payout ratio is due to the increasing in earnings. A high dividend payout ratio means that the company may not be able to sustain an increase in dividends.
The annual growth rate for a 10 Yr period is 12.50% but as the period becomes shorter, the annual growth rate becomes smaller. For the past 10 years, a low dividend yield and high dividend payout ratio indicate that McDonalds has been growing dividends below +10%.
McDonalds (MCD) is still a dividend champion as the firm has been paying dividends since 1980. We are expecting that McDonals will still be paying dividends at 94 cents per share in the next 2 quarters.