McDonald's Corp (NYSE:MCD) Offers a Compelling Case for Dividend Investors

When looking for good dividend stocks, investors often use screening methods that weigh several basic factors instead of just seeking the highest yields. The "Best Dividend Stocks" screen finds companies with good dividend features while keeping acceptable profitability and financial condition, using ChartMill's own rating method. This method helps sidestep dividend traps where high yields hide fundamental business problems, concentrating instead on companies with lasting payment abilities and sound financial footing.

Dividend Quality and Sustainability

McDonald's Corp (NYSE:MCD) offers a strong case for dividend investors, receiving a good 7/10 Dividend Rating from ChartMill. The company's dividend profile displays several positive features that match lasting income investment ideas:

• Reliable Dividend History: McDonald's has kept up dividend payments for at least ten straight years without cuts, showing management's dedication to shareholder returns across different market environments
• Steady Growth: The dividend has increased at an average yearly rate of 7.43%, notably beating inflation and giving investors real income growth
• Acceptable Yield: With a 2.32% dividend yield, McDonald's gives better income than 81% of its industry competitors while staying similar to the S&P 500 average

The sustainability numbers show why these dividend features are important for long-term investors. While the 59.52% payout ratio is at the higher side of the acceptable range, it is still workable considering the company's steady cash flows and earnings growth path. More significantly, earnings are increasing quicker than dividends, showing the current payment level is lasting without hurting future business investments.

Profitability Backs Dividend Payments

McDonald's very good profitability, shown by an 8/10 ChartMill Profitability Rating, forms the base for its dependable dividend payments. The company's operational effectiveness and pricing ability result in industry-best margins that guarantee steady cash creation:

• Excellent Margins: Operating margin of 46.13% does better than all industry competitors, while the 32.20% profit margin beats 99% of rivals
• Good Returns: Return on assets of 14.09% and return on invested capital of 17.40% both place in the top group of the restaurants industry
• Cash Flow Creation: Positive operating cash flow over the last five years supplies the needed liquidity for dividend payments

These profitability numbers are important for dividend investors because they show the company can maintain payments during economic slumps and keep funding the business growth that supports future dividend raises.

Financial Health Evaluation

With a 6/10 Health Rating, McDonald's shows suitable financial steadiness even with carrying significant debt, which is normal for the capital-heavy restaurant industry. The company's financial situation displays several good signs:

• Solvency Soundness: An Altman-Z score of 4.86 shows low bankruptcy danger and does better than 86% of industry rivals
• Liquidity Situation: Current and quick ratios of 1.30 and 1.29 each give enough short-term financial room
• Share Decrease: Falling shares outstanding over one and five-year spans shows shareholder-friendly capital use

The health rating is important for dividend investors because it makes sure the company can handle economic difficulties without having to reduce dividends. While the debt-to-free-cash-flow ratio of 6.00 seems high, it remains better than 72% of industry competitors and reflects the company's capacity to handle debts from operational cash flows.

Growth and Valuation Setting

McDonald's displays decent growth features with a 5/10 Growth Rating, having 8.20% average yearly EPS growth over recent years and estimated 9.23% EPS growth coming. This growth picture supports future dividend raises while the present valuation at 25.85 times earnings seems acceptable compared to the S&P 500 average.

For investors wanting to find similar dividend chances, the Best Dividend Stocks screen gives more choices meeting these balanced standards of good dividend features, acceptable profitability, and suitable financial health.

The full fundamental analysis report for MCD gives more detailed views into these rating parts and their basic drivers.

Disclaimer: This analysis is built on fundamental data and ratings given by ChartMill and shows an objective review of the company's financial features. It is not meant as investment guidance, and investors should do their own research and think about their personal financial situations before making investment choices.