MCDONALD'S CORP (NYSE:MCD) was identified by our dividend stock screener as a strong candidate for income-focused investors. The company combines a solid dividend track record with healthy profitability and financial stability, making it a noteworthy option for those seeking steady income.
Dividend Strength
- Consistent Payouts: MCD has paid dividends for at least 10 years without reductions, demonstrating reliability.
- Growing Dividends: The company has increased its dividend at an average annual rate of 7.43%, outpacing inflation.
- Reasonable Yield: With a 2.25% dividend yield, MCD offers a competitive return compared to the S&P 500 average of 2.36%.
- Payout Sustainability: While the payout ratio is 59.23%, earnings growth supports continued dividend increases.
Profitability & Financial Health
- High Margins: MCD maintains strong profitability, with an Operating Margin of 45.73% and Return on Invested Capital (ROIC) of 18.47%, outperforming most industry peers.
- Solid Financials: The company has a healthy Altman-Z score of 5.21, indicating low bankruptcy risk, though its debt levels warrant monitoring.
- Stable Cash Flow: Positive operating cash flow over the past five years reinforces dividend sustainability.
Valuation Considerations
MCD trades at a P/E ratio of 27.23, slightly above the S&P 500 average. While not cheap, its strong fundamentals justify a premium.
For a deeper look, review the full fundamental analysis of MCD.
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Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.
