MCDONALD'S CORP (NYSE:MCD) stands out as a strong candidate for dividend investors, according to our Best Dividend Stocks screen. The company combines a solid dividend track record with healthy profitability and financial stability, making it an appealing choice for income-focused portfolios.
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.
- Yield Above Industry Average: With a 2.29% yield, MCD offers better payouts than 80% of its peers in the Hotels, Restaurants & Leisure sector.
Profitability Supports Dividends
- High Margins: MCD's operating margin of 45.86% is among the best in its industry, ensuring strong cash flow.
- Return on Capital: The company generates an 18.02% return on invested capital, indicating efficient use of shareholder funds.
- Earnings Growth: Despite a slight dip in recent earnings, analysts expect 11.57% annual EPS growth in the coming years.
Financial Health
- Solvency: MCD's Altman-Z score of 4.99 suggests low bankruptcy risk, outperforming 88% of industry peers.
- Debt Management: While leverage exists, the company maintains manageable debt levels relative to cash flow.
Valuation Considerations
MCD trades at a 25.68 P/E ratio, slightly below the S&P 500 average. While not cheap, its premium is justified by strong fundamentals.
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.
