With the market rolling on into a brand-new year, it's a great time to take a look back at the companies you own and how they fared in 2011.

Sorry, S&P 500, there are no two ways about it: McDonald's (NYSE: MCD) absolutely kicked your butt last year. As that key U.S. index struggled to tread water, Mickey D's was rocketing upward, rewarding investors with significant capital gains while also throwing off a nice dividend.

Let's take a closer look at what exactly made it such a great year for the company.

A quick look at McDonald's

  Source: Yahoo! Finance.

Market Capitalization $103 billion
Total 2011 Stock Return 34.7%
1-Year Net Income Growth 8.6%
Trailing Price-to-Earnings Multiple 19.7
Trailing Dividend Yield 2.8%
CAPS Rating (out of 5) ****

Source: S&P Capital IQ. Motley Fool CAPS.

What went down in 2011
There were a lot of reasons to think that 2011 wouldn't be a great year for McDonald's. With a tough economy in the U.S., it seemed reasonable to assume many of McDonald's regulars would opt to cook at home on the cheap rather than spending on fast food. And with about 40% of McDonald's global sales coming from Europe, the debt crisis and lousy economy across the pond were perhaps even bigger risks.

But that was hardly the case. Revenue grew, profits grew, and margins held steady. One possible explanation is that while McDonald's core customer base stuck around, additional diners traded down from elsewhere. Higher-end P.F. Chang's (Nasdaq: PFCB) and Darden Restaurants (NYSE: DRI) both had a much more challenging year. Both revenue and profit fell at P.F. Chang's, while Darden fell victim to shrinking margins even as sales grew. Consumers who had been stretching to afford a meal at nicer chains like those may have found themselves pushed by the economy to exchange the quieter sit-down meal experience for a quick fast-food treat.

At the same time, coffee has been a particularly big push for Ronald McDonald & Co. The always pricey Starbucks (Nasdaq: SBUX) is a prime target when it comes to stealing business and it's certainly possible that a few mocha lattes were forgone for cheaper fare from McDonald's drive-through. Though that's not to say Starbucks had a poor year.

Of course the performance of a business and a stock don't always line up and in 2011 the run in McDonald's stock clearly outstripped the company's growth. So what gives? Three words: valuation multiple expansion. When the books were closed on 2010, McDonald's stock traded at just less than 17 times trailing earnings. At the end of 2011, the multiple was closer to 20.

As a McDonald's shareholder myself, a higher valuation makes me much more likely to sell than rush to buy more. But if the company continues to grow, churn out profits, and raise its dividend the way it did in 2011, I'll be happy hanging on to my shares and humming the company's "I'm lovin' it" jingle for years to come.

Fish in the sea
As a dividend-loving investor, McDonald's warms my heart through its long, strong track record of paying and raising its payout. However, it's hardly the only dividend-paying stock out there worth owning. To get the scoop on more great dividend stocks, check out The Motley Fool's special report "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can score a free copy by clicking here.