Friday, September 5, 2014

McDonald’s (MCD) Dividend Stock Analysis 2014

McDonald’s Corporation (MCD) franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. As of December 31, 2013, it operated 35,429 restaurants, including 28,691 franchised and 6,738 company-operated restaurants. McDonald’s is a dividend champion which has increased distributions for 38 years in a row.

Over the past decade this dividend growth stock has delivered an annualized total return of 17.90% to its shareholders.

The company has managed to deliver 16.70% average increase in annual EPS over the past decade. I expect future growth in annual earnings and dividends to be in the range of 7% - 10% per year in the next decade.

Currently, the stock is attractively valued at 16.70 times earnings and a current yield of 3.50%. There is an increasingly negative sentiment toward the company. I believe McDonald’s will overcome its problems, and reward patient shareholders who have a long-term horizon. I also find it easier to buy shares in a company when there is some known hang-up, which keeps price depressed. I would be even more excited if shares fell further from here, because this would mean more shares and more dividend income for every dollar I put to work. I have been adding to my position in the stock slowly throughout 2014.



Full Disclosure: Long MCD and YUM

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