Restaurant powerhouse McDonald’s (click ticker for report: ) announced it has raised its dividend 10% to $0.77 per quarter from $0.70 previously. We’ve long thought the firm was poised to grow its dividend, so this move comes as no surprise to us. Some have already declared CEO Don Thompson a failure, but we think the firm’s recent weakness is more a result of better domestic competition and struggling global macroeconomic conditions than any management mishaps.
A 10% dividend increase is a sign of confidence from management, in our view, and we’re big fans of the firm’s 3.3% annual dividend yield at current levels. The firm isn’t trading at a sufficient enough discount to its fair value to justify a position in our Dividend Growth Newsletter, but we’ll continue to monitor developments as we like its strong competitive position. Though its Valuentum Buying Index (our stock-selection methodology) score is only 4, we wouldn’t hesitate to add the firm to either of our actively-managed portfolios on a significant market pullback that drives the VBI rating higher.
Please click the following link for our Dividend Report on McDonald’s: