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A Bigger Payday From Mickey D's

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McDonald's (NYSE: MCD  ) just can't be stopped. Not only has its share appreciation been a winner for investors over recent years, but now it's raised its dividend again, to boot.

Mickey D's is boosting its quarterly dividend by 11% to $0.61 per share, which will add up to $2.44 per share on an annual basis. McDonald's dividend yield is now 3.2%.

The fast food behemoth's shareholders are surely smiling right now. The stock's up 39% in the last year alone, and that dependable dividend is a tasty added bonus. And that payout is one reason my Foolish colleague Jim Royal called the stock a dividend play for a lifetime. McDonald's beats the conventional wisdom that dividend payers are necessarily slow growers.

There are of course other solid dividend payers out there in the restaurant space, like rivals Starbucks (Nasdaq: SBUX  ) and Yum! Brands (NYSE: YUM  ) . Of course, a dividend that grows less than expected can occasionally throw a wet blanket on a stock price. Microsoft's (Nasdaq: MSFT  ) recent dividend increase fell short of expectations and cast a pall on the stock. But increases usually signal that a company is confident in its current prospects and therefore is able to relinquish some cash.

Investors shouldn't bet against McDonald's. It's a far superior stock to longtime struggler Wendy's/Arby's (NYSE: WEN  ) , which pays out a modest 1.3%. Mickey D's has been excelling operationally, too. It is still a solid stock for long-term portfolios.

Microsoft is a Motley Fool Inside Value pick. Starbucks is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. Motley Fool Options has recommended a bull call spread position on Yum! Brands. The Fool owns shares of Microsoft and Yum! Brands. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.


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Alyce Lomax
TMFLomax

Alyce Lomax is a columnist for Fool.com and an analyst for Motley Fool One. Since 2010, she has managed the real-money Prosocial Portfolio, which integrates socially responsible investing factors into stock analysis.

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Related Tickers

6/29/2015 4:00 PM
MCD $95.44 Down -1.85 -1.90%
McDonald's CAPS Rating: ***
MSFT $44.37 Down -0.89 -1.97%
Microsoft CAPS Rating: ***
SBUX $53.55 Down -1.07 -1.96%
Starbucks CAPS Rating: ****
WEN $11.20 Down -0.15 -1.32%
The Wendy's Compan… CAPS Rating: ***
YUM $89.61 Down -3.14 -3.39%
Yum! Brands CAPS Rating: ****

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