McDonald's Corporation (NYSE:MCD) has had a rough 2012. The stock came into 2012 at over $100. Today its trades for only $84.12. This is a 16% drop year to date.
The decline in this dividend champion is a rare buying opportunity. McDonald's has a strong record of increasing dividend, having raised its dividend every year since 1976. The stock has also been buying back shares, buying back more than 276 million shares since 2007.
Revenue at McDonald's for the third quarter of 2012 came in at $7.15 billion, a decrease of less than 1% compared with the $7.16 billion of revenue reported in the third quarter of 2011. Revenue for McDonald's is divided into two segments: sales by company operated restaurants and revenues from franchised restaurants. Sales by company operated restaurants for the third quarter of 2012 came in at $4.84 billion, a decrease of 1% compared with the $4.86 billion for the third quarter of 2011. Revenues from franchised restaurants for the third quarter of 2012 came in at $2.32 billion, an increase of less than 1% compared with the $2.31 billion for the third quarter of 2011.
McDonald's earnings per share for the third quarter of 2012 came in at $1.43. This is a decrease of $0.02 or 1.5% from the $1.45 reported for the third quarter of 2011.
(click to enlarge)
On September 20, 2012, the McDonald's Board of Directors declared a quarterly cash dividend of $0.77 per share of common stock payable on December 17, 2012. This represents a 10% increase over the Company's previous quarterly dividend of $0.70. At its current price of $84.12 the yield is 3.66%. McDonald's Chief Executive Officer Don Thompson stated about the increase, "Today's announced dividend increase brings our 2012 expected total cash return to shareholders to at least $5.5 billion through dividends and share repurchases."
McDonald's has been steadily reducing its shares outstanding. As of the end of the third quarter 2012 the company had 1.01 billion shares outstanding. This is a decrease of 1.6% from the 1.04 billion shares outstanding at the end of the third quarter of 2011.
McDonald's dividend payout ratio for the third quarter of 2012 came in at 49%. This an increase of 7% from the 42% of the third quarter of 2011. However the average payout ratio for the 8 quarters since Q4 of 2010 has been 51%.
LONG TERM DEBT AND INTEREST EXPENSE
McDonald's long term debt at the end of third quarter of 2012 was $12.75 billion. This is an increase of 16% from the $10.99 billion at the end of the third quarter of 2011. Interest expense for the third quarter of 2012 came in at $128 million. This is an increase of 3% from the $124 million reported for the third quarter of 2011. McDonald's has benefited from the retiring older higher interest debt with newer lower interest debt.
McDonald's Global Comparable Sales Decreased 1.8% in October.
McDonald's suffered a set with global comparable sales decreasing 1.8% in October 2012. US sales were down 2.2%, Europe down 2.2% and Asia/Pacific, Middle East and Africa down 2.4%.
McDonald's Announces Change in Leadership at McDonald's USA
On Nov 15, 2012, McDonald's announced that Jeff Stratton, currently Global Chief Restaurant Officer, will succeed Jan Fields as president of McDonald's USA, effective December 1. Fields will be leaving after more than 35 years with the company.
McDonald's has had a rough few months, but this stock is a dividend and stock buyback machine. With is near 3.7% yield and yearly 10% dividend raises, McDonald's is a solid choice for those seeking dividends and dividend growth.
Disclosure: I am long MCD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.