McDonald’s (MCD) Dividend Stock Analysis
McDonald’s Corporation, together with its subsidiaries, franchises and operates McDonald’s restaurants in the food service industry worldwide. The company's share of the US fast food market is several times larger than its closest competitors, Burger King (BKC) and Wendy's (WEN).
McDonald’s is a major component of the S&P 500 and Dow Industrials indexes. The company is also a
dividend aristocrat, which has been consistently increasing its dividends for 32 consecutive years. From the end of 1998 up until December 2008 this dividend growth stock has delivered a negative annual average total return of 6.70% to its shareholders.
At the same time company has managed to deliver an impressive 11.70% average annual increase in its EPS since 1999. Analysts are expecting MCD to grow EPS to $4.20 by 2010. The economic slowdown is making consumers to trade down and dine out at fast food places like the ones owned by the Golden Arches. Mcdonald’s has been focusing more on expanding the sales of existing restaurants since 2003 versus relying on new stores to be the driver for growth. Same store sales and profits have been driven by product innovation, and comparable-store sales growth, and are part of the company’s recent success. The constant innovations in the menu are indeed fueling strong same store sales volumes.
International operations, which accounted for almost half of operating profits in 2008, have been a major growth factor over the past two decades.
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