investors are getting a raise. The fast-food titan recently announced an 8% increase to its quarterly dividend, bringing the annual payout to $5 per share.
Given its long track record of annual raises and its improving operating trends over the past few years, the boost wasn’t much of a surprise. But there are still a few facts about the dividend that investors might not know.
1. It’s the chain’s 43rd consecutive dividend increase.
The 8% dividend boost follows last year’s 15% hike and marks McDonald’s 43rd straight year of issuing annual payout raises, stretching back to when the chain initiated its quarterly dividend back in 1976. The fast-food industry has gone through plenty of upheaval over that time, and the pace of change has only sped up in recent years (although the 50-year anniversary of the Big Mac last year shows how some tastes are remarkably stable).
McDonald’s remains an industry leader today, mainly thanks to its flexible operating approach. In just the last few years, for example, investors have seen the chain dramatically reduce the level of corporate-owned restaurants, roll out fundamental ingredient and food preparation changes, and introduce sweeping updates to its stores and menu options.
2. McDonald’s can afford it.
The increase brings the annual payout to roughly $3.6 billion, which is less than half of the $9 billion of operating income McDonald’s earned last year. The payout ratio is similarly strong when you compare it to bottom-line profits. The dividend represents about 61% of last year’s net income, and that percentage is likely to fall in fiscal 2019 given the chain’s earnings surge.
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