03-21-2013, 10:52 PM
Yeah. It is tough to put new money in at highs. I think MCD is near both 52-week and all-time highs. Here is the beauty of an excellent dividend growth stock, though:
The first time I ever bought MCD was in August of 2011. I paid $82.71 per share at that time. That sounds pretty good right about now, considering that it closed today at over $98 per share, right? Having paid $82.71 per share, $98 buck just feels way too expensive.
But guess what? In August of 2011 when I paid $82.71 per share, MCD was paying $2.44 in dividends annually, giving me a yield of 2.95% at my purchase price. Since then, they have raised the dividend a healthy amount -- it now pays $0.77 per quarter, or $3.08 per year. At today's close of $98.53 per share, that $3.08 works out to a dividend yield of 3.14%.
Think about that carefully. What that means is that -- relative to the income stream from dividends -- MCD is cheaper today at $98.53 than it was in August 2011 at $82.71. If you focus on the income stream that you are purchasing with your newly invested capital, rather than just on the share price, it can be clear that new highs don't matter so much.
I personally think that McDonald's is going to keep selling burgers and fries through good times and bad. I think the company is going to have good years and not so good years, and the stock price will be tough to predict. But I would not be afraid to start a long-term relationship with the company at these prices, because I think they will continue to generate good cash flow and earnings to pay and continue to increase the dividend.
If you are still daunted, break your investing into smaller pieces. Buy a few shares now, and if it comes back down a bit, buy some more, lowering your average price per share.
Best of luck!
The first time I ever bought MCD was in August of 2011. I paid $82.71 per share at that time. That sounds pretty good right about now, considering that it closed today at over $98 per share, right? Having paid $82.71 per share, $98 buck just feels way too expensive.
But guess what? In August of 2011 when I paid $82.71 per share, MCD was paying $2.44 in dividends annually, giving me a yield of 2.95% at my purchase price. Since then, they have raised the dividend a healthy amount -- it now pays $0.77 per quarter, or $3.08 per year. At today's close of $98.53 per share, that $3.08 works out to a dividend yield of 3.14%.
Think about that carefully. What that means is that -- relative to the income stream from dividends -- MCD is cheaper today at $98.53 than it was in August 2011 at $82.71. If you focus on the income stream that you are purchasing with your newly invested capital, rather than just on the share price, it can be clear that new highs don't matter so much.
I personally think that McDonald's is going to keep selling burgers and fries through good times and bad. I think the company is going to have good years and not so good years, and the stock price will be tough to predict. But I would not be afraid to start a long-term relationship with the company at these prices, because I think they will continue to generate good cash flow and earnings to pay and continue to increase the dividend.
If you are still daunted, break your investing into smaller pieces. Buy a few shares now, and if it comes back down a bit, buy some more, lowering your average price per share.
Best of luck!