-Quarterly dividend increased by 10%
-Continues unbroken 46 years of dividend hikes
-Q3 earnings expected 27 October
Investors looking to combat surging inflation need look no further than global fast food giant McDonald’s (MCD:NYSE) which announced (13 October) a mouth-watering 10% increase in the quarterly dividend to $1.52 per share.
This tops the latest consumer price inflation with the core rate jumping to a 40-year high of 6.6% this week.
The new payout is equivalent to an annual payout of $6.08 per share, which implies a yield of 2.5% at the current share price.
The cash payment will made on 15 December to shareholders on the register on 1 December 2022. Investors welcomed the news, pushing McDonald’s shares up 4% to $246.7.
The shares have gained around 5% in the last year compared with a 15% loss in the S&P 500.
INFLATION BUSTING RECORD
McDonald’s capital allocation policy is to reinvest in the business to drive profitable growth and pay out any surplus capital back to shareholders via dividends and share buybacks.
The company has a long history of increasing its dividend which stretches back to 1976 when it paid it first dividend. Over the last decade the dividend has increased by around 7% a year.
In addition, the company has purchased and cancelled around 25% of its shares in the last decade, equivalent to around 2.2% a year.
WHAT ANALYSTS ARE EXPECTING
McDonald’s is expected to report third quarter earnings on 27 October where analysts have penciled in earnings per share of $2.64 which represents year-on-year growth of 11.4% according to MarketBeat data.
In the second quarter the company topped analysts’ earnings estimates by around 4% despite falling short on revenues which came in at $5.7 billion compared with forecasts of $5.8 billion.
We looked at the McDonalds investment case in detail in this article.
