Recession or not McDonald's increases dividend for the 32nd year

Updated: Friday September 25, 2009 MYT 7:55:44 AM
Recession or not McDonald's increases dividend for the 32nd year


OAK BROOK, Illinois: McDonald's Corp. said Thursday that its board has raised its quarterly dividend 10 percent to 55 cents. It will be paid on Dec. 15 to shareholders of record as of Dec. 1. The increase brings its yearly dividend to $2.20 and its total quarterly dividend payout to about $600 million.

The previous quarterly dividend was 50 cents.

The company said it has raised its dividend every year since paying its first dividend in 1976.

The most recent increase puts the company at the high end of its goal to return between $15 billion to $17 billion in cash to shareholders over a three year period that started at the beginning of 2007, the company said.

McDonald's also said it would delist its stock from the Chicago Stock Exchange, where it had its secondary listing.

It decided to leave the Chicago exchange because of low trading volume there.

After Oct. 30, it will be listed only on the New York Stock Exchange.

McDonald's shares rose 58 cents to close Thursday at $56.12.

The stock added another 3 cents after hours following the dividend increase. - AP

http://biz.thestar.com.my/news/story.asp?file=/2009/9/25/business/20090925075349&sec=business


Comment:  

At the price per share of $56.12, the yearly dividend of $2.20 translates into a DY of 3.9%.  This is equivalent to a dividend multiple of 25.5x.

A company giving increasing dividends year on year will see its share price trending upwards in unison.

Given the low interest rates for fixed deposits and low treasury yield, investing into this stock provides a better return comparatively.  Those with a long term investing horizon need not worry about the price volatility of the share.  The long term gains from dividends and capital gains seem safe and predictable as long as the company continues to perform as it did in the past.