McDonald's Corporation Stock Analysis (Member of Dividend Aristocrat List)

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McDonald's Corporation (MCD) is a proud and long-term member of the Dividend Aristocrat list.  As we all know, they are a giant in the food industry and do an extremely large amount of business inside and outside our United borders.  During economic turmoil, people that want a cheap/quick meal head to the good old golden arches and munch on Dollar Menu items.  Their growth is still there as they explore further emerging market strategies.  Let's get to the analysis..


P/E Ratio: McDonald's current share price is $76.03 with an earnings per share of $4.58.  P/E breaks down to (76.03/4.58) 16.6.  Not incredible higher than the "15" that I like, it does fit in my range.  MorningStar places it against other in their industry with an average of 22.1.  Extremely undervalued when you compare it to it's top competitors.  Very attractive to an investor.

Potential Appreciation: McD's 52 week high stands at $80.94.  This currently gives it a ((80.94-76.03)/76.03) 6.5% appreciation upside based on the past history.  However, I wouldn't add MCD for appreciation to my portfolio.  I would add it based on the brand-sake and their beautiful dividend yield and consistency in that growth, to which I break into next..

Dividend Yield & Payout: Now McDonalds has consecutively paid and increased Dividends for over 34 years now and continues to do so at a nice increasing rate.  Their current yield of ($0.61*4) 3.21% is extremely attractive as it is over the 3% mark that I enjoy.  The payout ratio of $2.44/$4.58 = 53.27%; almost smack down in the middle of my 40-60% range = another thumb's up in my book.  Last increase  from 55 cent to 61 cents per share provided an 11% increase alone.  They paid a 33% increase back at the end of 2008 aka during one of the worst financial time periods we have endured.  Wow.  Really solid if I may say.

Conclusion: McDonald's is a great choice/pick to add to your portfolio.  With a market capitalization of close to $80Billion, no one comes close to them.  They currently are expanding their international business and are consistently increasing that beautiful dividend that us, as investors, love to see.  McDonald's, at any time, is a great way to start your dividend portfolio.  With their above 3% yield and consistent increases of over 10% to their payout, while maintaining a medium pay-out ratio, is extremely attractive.  Our waistlines may not enjoy the "Golden Arches" but our portfolio's sure do : )  Enjoy!

-Lanny B.

Disclosure: I do not recommend anything, please consult your own research. This is actual data, analysis, however I base no investor recommendation.  I am LONG MCD.  Thank you for your understanding.


Picture Location: http://www.stamp.umd.edu/food/mcdonalds.shtml

AT&T Stock Analysis

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AT&T (T) has paid dividends for 26 years.  They have had at least 5 years of consecutive dividend increases and are a truly ruler in their area of the technology sector.

Their price: as of January 16th 2011 they are trading at $28.43. Their 52 week high is $30.10, giving a 5.55% appreciation on the pricing giving its most recent high. Their low is $23.78 over the prior 52 weeks. Therefore, it is close to the 52 week high.  I usually like to buy further away than that 52 week high, simply because I am cheap : ), but then again my preferences can be completely different than yours.  

Price to Earnings Ratio: AT&T has a current 8 P/E ratio (According to Google Finance), well below the S&P average and according to Morning star is far below the 15.8 P/E for the industry average. Therefore, AT&T's stock is relatively cheap to its earnings and is currently undervalued against the average of both the industry and S&P index.

Dividend Yield: Of course I am bringing up their dividend yield currently.  Their current dividend yield when trading at $28.43 is 6.05%.  Wow.  Pretty high if you ask me.  Most telecommunication stocks, however, do have high yields, therefore, this isn't unusual for this industry.  Also, their dividend yield growth rate is just over 5% according to my analysis since 1984.   That isn't as high as I typically like to see it, however the yield is high and increasing what they pay out by 5% every year still isn't too shabby : ) 

Payout Ratio: Their dividend is $1.72 per year and their EPS is $3.55. Therefore, 1.72/3.55 = 48.45%, right in the middle of where I like it (Between 40 and 60%)!!  This gives a great big thumbs up in my book as a close to 50% payout ratio tells me that basically they keep half of their earnings for growth or other means of action and they give half of them back to their investors!

Conclusion: AT&T is a great stock to add to your portfolio.  Given it's current price, I would like to see it maybe 50 cents to a dollar cheaper, as I think Verizon's deal with Apple for the iPhone could hinder AT&T's performance for the future.  However, one has to realize AT&T's total business - Internet, U-Verse (TV), Direct TV, Home Phone Lines, Business Lines, Mobile Devices, Publications etc., etc.  Therefore, they have different cash flow vehicles in their portfolio rather than just their mobile branch.  They have been around for a very long time period and I believe will be for the future.  

-Lanny B.

Disclosure: I do not hold nor recommend anything. This is actual data, analysis, however I base no investor recommendation. However, I personally would add/start a position on this firm, however my direction is different from anyone else's. Thank you for your understanding.

My Dividend Portfolio as of 12/31/2010

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My Dividend Portfolio:

Symbol	Yield	Current ShP	Annual Income
PFE	4.57%	$17.51	42.70
CIM	16.79%	$4.11	31.15
NGG	6.31%	$44.38	49.66
V	0.85%	$70.38	3.35
HRB	5.04%	$11.91	9.60
ANH	13.86%	$7.00	7.76
HIMX	10.59%	$2.36	8.25
PRGN	5.83%	$3.43	2.00
SHMR	5.85%	$13.75	8.04
LMT	4.29%	$69.91	87.00
TOTAL	5.17%		249.51

This marks a 45.12% increase in my annual divided cash flow from my November 27th posting regarding my holdings.  This is due to a few reinvestments from stocks that I own and also a new addition of Lockheed Martin Corporation (LMT), which I purchased Thursday, December 30th.  I have set many goals for this year, to which I will use my recent action on Thursday as one for the new year.  I set goals with my friend who is an auditor in Chicago, who was in town and we decided to really set goals and strategize on how to accomplish these.

My goals for 2011:
Invest $7,500.00 (minimum) into DRIP (Dividend Reinvesting) stocks (Update: I have done $2,000)
Maximize my Roth IRA contributions of $5,000.00 for year 2011
Create other Passive Income Streams (which one can see from my Passive Income Online blog)
Start Positions in Speculative/Micro Cap stocks
Accomplish my education and certification goals for 2011 (MBA-Finance graduating May 2011 and CPA exam August 2011)

With these goals, more specifically the investment goals, I hope to add to my dividend income stream.  I will continue to reinvest my dividends from my holdings, which will thus provide me more shares of that stock, thus increasing my dividends annually (all else held constant such as a stable dividend etc).

Disclosure: I do not recommend any particular company. I am therefore Long on all stocks above, but do not provide this chart as a recommendation of any sort. Do your due diligence and find what is suitable for you. Thank You : )

Dividend Increases

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Today, Pfizer increased its Dividend payout by 11%.  This brings its dividend per share, per quarter to 20 cents.  The reason this excites me is because I hold it in my portfolio and it stems a new lesson that I would like to talk about: Dividend Payout Increases

As we all know, there are two ways we can get a return from stock that we own - Dividends and Capital Appreciation (though you would have to sell your stock to even feel the benefit).  How would you like a cash flow stream from a company's stock that you own, to give you raises every year?  That is basically why I tend to hold Dividend paying Company's stock in my portfolio.  It just makes sense...

For Example: Say if you did own Pfizer and your Dividends normally received from them was $1,000 per year.  Now, from their new dividend increase, you receive $1,110 per year, a nice little $110 raise.  How much work did you have to do for that dividend raise?  Well, if your a small shareholder - besides the research and checking on the company every now and again you really haven't done much work for it.  Also, if you continue to reinvest those dividends, you are now putting more back into your portfolio and owning more of these dividend-paying and dividend-increasing shares; thus adding more to your cash flow.  Another tid-bit, typically when a firm increases their dividend payout - the share price will raise by the annual raise: Example - Pfizer increased their Dividend by 8 cents annually, therefore share price should increase by 8 cents at least (as of market close today 12/13/10 Pfizer finished up 17 cents for a 1% gain).  Therefore, you receive capital appreciate as well from an increase in dividend payout, which fulfills both shareholder returns.

Lessons Described Here: Dividend Paying and Dividend Increasing Companies will further add and grow your cash flow, effortlessly (Less research and keeping up to date with company) growing your portfolios value and possibly raising the value per share in terms of stock price.  The key terminology in the business world is Cash Flow, because that is what primarily determines the value of an asset.  I suggest doing research and finding those great dividend paying company's that annually/frequently increase their dividend payouts.

Disclosure: I do not hold nor recommend anything.  This is actual data, analysis, however I base no investor recommendation.  My position is LONG PFE.  Thank you for your understanding.

To Begin a Dividend Portfolio...

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To Begin that Cash Flowing Dividend Portfolio - A great way to start is through a Dividend Aristocrat that is paying a higher yield than the S&P is on average, which is currently 1.85% and has a lower Price to Earnings Ratio (P/E: Which can show undervaluation if low, low among competitors and industry) than the S&P average, which current mean is 16.38.  

What is a Dividend Aristocrat? - "Companies that have had an increase in dividends for 25 consecutive years." Thanks to Investopedia.com for that : )

What a better way to start a portfolio than with a company that has always paid a dividend, and not only that, but has INCREASED their payments for 25 years +.

Here is a list of a few companies that have had astounding presence in the world, have a yield larger than the S&P500 average yield and also produce an extremely phenomenal (above 10%) growth rate in their dividend yield

Johnson and Johnson (JNJ): Current Yield: 3.50%; Dividend Growth Rate Annualized: 14.58%; Dividend Payout Ratio: 44.35%; Price/Earnings: 12.82.  If you would have invested $1,000.00 on 12/1/1985:

Investment Date:	Original Shares:	Original Value:	Current Shares:	Current Value:	Percent Return:
Dec 1, 1985	20	$ 1,000.00	534	$ 32,887.96	3,188.80%

Source: JNJ Investor Relations






Abbott Laboratories (ABT): (Actually just did a huge investor analysis on this company along with 2 big competitors!) Current Yield: 3.80%; Dividend Growth Rate Annualized: 12.89%; Dividend Payout Ratio: 58.09%; Price/Earnings: 15.85
If You would have invested $1,000.00 on 11/30/1990 (As far as their Investors page allowed) Source: Abbott Investors: 

Date Requested	11/30/90
Closing Price	$10.25
Split Adjustment Factor	4.2562:1
Shares Today	975.64
Investment Value	$45,864.76
Percent Change	358.65

Cincinnati Financial (CINF): Current Yield: 5.30%; Dividend Growth Rate Annualized: 9.80%; Dividend Payout Ratio: 52.63%; Price/Earnings: 10.13; If you would have invested $1,000.00 on 11/29/1985.  Sources: CINF Investors:

Date Requested	11/29/1985
Closing Price	$5.10
Shares Today	1,959.32
Investment Value	$60,366.67
Percent Change	503.6

WOW!  The power of compounding and starting early pays off tremendously, especially in evidence from these 3 company's above.  These 3 are just some great examples that show undervaluation compared to the S&P 500 as a whole, a greater dividend yield than the market on average and also shows how consistent their dividend growths have been for over 25 years.  The reason I display these to possibly start a portfolio, is because they have extreme history on consistency and helps to possibly lower investor risk.  If you are looking for cash flow to build up over time, these dividend paying firms have proven their ability to do so.  Like I said, if you have one of these stocks in a DRIP (Dividend Reinvestment Plan), you will reap the benefits.  I hope you enjoyed this article and please do not hesitate to contact me and/or comment below.

-Lanny B.

Disclosure: I do not hold nor recommend anything.  This is actual data, analysis, however I base no investor recommendation.  However, I personally would add/start a position on these firms, however my direction is different from anyone else's.  Thank you for your understanding.
 
Picture Compliments to: http://risalta10.guihospeda.com/johnson-and-johnson.html, http://planowatchdog.com/, http://www.warconstruction.com/businessPartners.aspx

My Dividend Portfolio as of November 27, 2010

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Today I will display my holdings for individual stocks, their yields and annualized incomes from the stock. (The annualized portion is based on the amount of shares I own X the annual dividend per share.)
I will be displaying this on a frequent basis to show growth in my portfolio from DRIP and other purchases and analysis' that I make.  I am using this as a tool, also, for myself to see how my portfolio is growing.

Symbol Yield Current ShP Annual Income PFE 4.37% $16.49 38.04 CIM 17.73% $4.06 32.51 NGG 7.84% $45.24 62.93 V 0.79% $75.48 3.35 HRB 4.70% $12.77 9.48 ANH 14.08% $6.96 7.84 HIMX 11.57% $2.16 8.25 PRGN 4.26% $3.52 1.50 SHMR 5.83% $13.78 8.04 TOTAL 6.19% 171.93

As you can see, I have a mix of stocks, some speculative some very sound, but it is getting diverse.  I have been choosing individual stocks for about 6 months now and am seeing dramatic results in terms of share price return as well as dividend income growth.  I currently stand at $171.93 in dividend income per year and will post again in December to see if that number has grown - to which I will describe the growth: Dividend Reinvestment or New Funding from my own pocket for growth.

From seeing this simple chart, I see that Visa is a relatively low yield, to which I am not happy.  I purchased them in the mid-upper $60 range and will wait to see what the price does.  They did raise their dividend by 20% for this recent quarter from 12.5 cents to 15 cents per share.  I know it doesn't seem like a lot, but a 20% growth rate is phenomenal.  The reason why I hold on to them is because I feel there is more price appreciation that is there and I want to see if they will continue to make this growth pattern.

Pfizer: PFE, will be paying me dividends this December, as well as Visa (V), and Paragon Shipping (PRGN).  Thus, with dividend reinvestment, this should automatically raise my annualized dividend income, just as long as they continue to make at least the same dividend payment next quarter; this is due to the fact through Dividend Reinvestment I will be owning more shares.

I will report back on another analysis, enjoy the rest of Thanksgiving Break everyone!

-Lanny B.

Disclosure: I do not recommend any particular company. I am therefore Long on all stocks above, but do not provide this chart as a recommendation of any sort. Do your due diligence and find what is suitable for you. Thank You : )