Wholly Misleading Half Truth: What McDonald’s can Afford

According to MarketWatch, at writing (July 3rd, 2015) dividend yield is 3.54% and the market capitalization 92.18 B$. This works out to a total dividend of 3.26 B$, annually.  This is for the McDonald’s corporation, which runs about 15% of the restaurants called “McDonald’s”. Presumably, the 20 B$ figure asxumes the other 85% of restaurants are as profitable, and pay as much dividend, as those owned by the McDonald’s corporation. Also, it assumes that the profits of McDonald’s are solely from restaurants.

Considering that those restaurant franchises have to pay McDonald’s franchising and marketing fees, and often rent to the McDonald’s corporation, those are not reasonable assumptions to make.

To get better estimates, look at the income per employee of about 11 k$. Assuming this is based on full time equivalent employees, a raise of 5 $/hr for the 2087 hours of full time employment, would reduce that income to 893 $/year. In other words, it would hardly be worth it for McDonald’s to have the risks of running a business.


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