MCDONALD'S CORP (NYSE:MCD) – A Reliable Dividend Stock Worth Considering

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.