Late Thursday, McDonald's (NYSE: MCD) announced a 10% increase to its cash dividend. The fast-food firm will now shell out 55 cents per share each quarter, bringing its total quarterly dividend payout to roughly $600 million. The increase will cost McDonald's about $220 million per year. This most recent dividend hike continues a long-term trend for Mickey D's, which has raised its quarterly payout every year since 1976.
In other MCD news, Bernstein initiated coverage of the stock with an "outperform" rating. The brokerage firm likes McDonald's because of its broad global footprint, with Bernstein noting that restaurants more heavily dependent on the sluggish U.S. market could struggle.
Shares of the Big Mac baron are up more than 1% in the wake of Friday's news. However, the stock hardly looks healthy at its current levels; MCD is off nearly 10% year-to-date, compared to a gain of 11% for the broader Dow Jones Industrial Average (DJIA). Since late July, the shares have languished beneath stubborn chart resistance at the $57 level.
Short sellers have taken note of the stock's weakness, and they've been loading up on bearish bets in recent weeks. The number of MCD shares sold short rose by 6.2% during the most recent reporting period, and short interest now accounts for 0.9% of the equity's available float. If traders continue to bet against MCD, the resulting selling pressure could exacerbate its technical underperformance.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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