A Bigger Payday From Mickey D's

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.


Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

DocumentId: 1310418, ~/Articles/ArticleHandler.aspx, 4/17/2014 11:46:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement