I love this chart.
It shows what happens if you had purchased and reinvested dividends in McDonald’s stock over the past two decades. For most of McDonald’s history, the initial dividend yield was terrible. As you can see in this picture, someone who purchased McDonald’s twenty years ago had to settle for an initial dividend yield of 0.9%. Understandably, a lot of income investors don’t get excited by that.
I mean that: it is understandable. If income is your game, you don’t want to set aside $10,000 to receive what amounts to a little over $8 per month in immediate income. That keeps your car washed for the year.
But yet, there is a subset of companies: IBM, Becton Dickinson, Disney, and Visa, to name a few, that automatically get written off by investors because they do not offer a promising initial dividend yield. Their appeal, though, is how fast … Read the rest of this article!