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McDonald’s Raises Its Dividends for 4Q16

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Dividends

In September 2016, McDonald’s (MCD) announced dividends of $0.94 for the fourth quarter, taking the total dividend for 2016 to $3.61. This dividend represents a year-over-year growth of 5.0% from the $3.44 reported in 2015.

For the next four quarters, analysts expect McDonald’s to pay dividends of $3.76, which represents a growth of 5.6% from the $3.56 paid in corresponding quarters of the previous year.

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Dividend yield

Analysts expect McDonald’s dividend yield to be 3.0% in 2016 and 3.1% in 2017. A company’s dividend yield indicates how much the company pays out in dividends each year relative to its share price.

Capital reallocation

McDonald’s expects to return $30 billion to its shareholders through share repurchases and dividends for the three-year period ended 2016. By the end of 3Q16, the company had returned $28 billion to its shareholders through share repurchases and dividends, which leaves $2 billion in combined dividends and share repurchases to have been completed in the remaining two quarters of 2016. In 3Q16 alone, the company returned $3.4 billion to shareholders through share repurchases and dividends.

You can gain exposure to McDonald’s by investing in the iShares US Consumer Services ETF (IYC), which has invested 3.4% of its holdings in McDonald’s. IYC has also invested 2.8%, 0.75%, and 0.40% in Starbucks (SBUX), Yum! Brands (YUM), and Chipotle Mexican Grill (CMG). Next, we’ll look at McDonald’s valuation multiple ahead of its 4Q16 earnings.

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