McDonald's Corp. (MCD) is the world's largest company in the restaurant industry. As of December 2020, McDonald's has a market capitalization of $158.05 billion. If you were able to purchase 100 shares of McDonald's common stock during its initial public offering (IPO), that investment would be worth over $12 million today. Moreover, you would be receiving a quarterly dividend, amounting to over $345,000 per year.
Value of a McDonald's Corporation IPO Investment
If you were lucky enough to purchase 100 shares of McDonald's when it was at $22.50 on its IPO date, you would have spent $2,250. Given McDonald's closing stock price of $212.00 on Dec. 22, 2020, that investment would be worth more than $12 million today. Additionally, you would have owned over 74,360 shares of McDonald's common stock after its stock splits. Since its IPO, McDonald's has split its stock 12 times and as of December 2020 pays out a 2.4% stock dividend.
McDonald's had its first stock split in 1966, which was a three-for-two stock split. Therefore, those 100 shares would have become 150 shares after the stock split. Not long after, the company announced a 2% stock dividend in 1967, which would have provided an extra three shares. After five more three-for-two stock splits and six more two-for-one stock splits, you would have owned 74,360 shares.
In addition to the investment increasing due to the growth of McDonald's share price, you would have also received income from its cash dividends. McDonald's has been paying out quarterly dividends, without interruption, since 1976; moreover, it has increased its dividend every year since 1976. Therefore, it is included in the exclusive group of dividend-paying stocks known as the S&P 500 Dividend Aristocrats. Accounting for the 74,360 shares, your dividend payment per year would be $345,440.
History of McDonald's
McDonald's started off as one restaurant in 1940, but since then, it has become the world's leading global foodservice retailer. Dick and Mac McDonald opened McDonald's Bar-B-Q in San Bernardino, California, in 1940. By 1948, McDonald's operated as a self-service drive-in foodservice retailer. McDonald's had over 700 restaurants across the United States by 1965. Ray Kroc, an American businessman, joined the company in 1954 and opened up his first McDonald's in Des Plaines, Illinois, on April 15, 1955. Ray Kroc intended to sell Multimixers (blenders with multiple spindles used to make milkshakes) to Dick and Mac during his visit to McDonald's in San Bernardino. However, his epiphany to become a franchising agent paid off.
McDonald's Rise to the Top
McDonald's dates its founding to the first opening of a franchised restaurant by Ray Kroc. McDonald's celebrated its 10th anniversary by initiating its first public stock offering at $22.50 per share. After its first day as a publicly-traded company on April 21, 1965, the stock had soared to $30 per share, and its owners became millionaires.
McDonald's stock has enjoyed healthy gains since 2003. McDonald's stock price has increased 10-fold since that time, and that isn't even factoring in distributions. The stock hit an all-time high in August 2019. Additionally, based on trailing 10-year data, McDonald's posted an average annual return of 12.94%, as of Sept. 10, 2020. With McDonald's growth and blue-chip status, the stock shows no immediate signs of slowing.
The Bottom Line
While even blue-chip companies have fluctuating stock prices, over the long term, having stock in companies like McDonald's is generally a good investment. What remains to be seen is how the Covid-19 pandemic of 2020 will affect McDonald's stock price going forward.