McDonald’s
operates, franchises or licenses more than 35,400 fast food restaurants worldwide. Over the past ten years, the company has
grown profits at a 15% pace but dividends at 26% annualized while earning a
25%+ return on equity. Looking forward,
the pace of advance of dividends should slow somewhat although earnings growth
is expected to continue at an above average pace as a result of:
(1) global
growth not only in the number of restaurants but also in same store sales,
(2) introduction
of new higher margin products [McCafe Real Fruit Smoothies, Frappes, Angus
snack wraps],
(3) a shift to
franchising which accelerates earnings growth.
Negatives:
(1) rising
commodity prices and wage costs,
(2) intense
competition,
(3) the
potential impact on sales of continuing economic malaise.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Ind Ave 2.4* 10* 44 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
*over 50% of the companies in
this industry don’t pay a dividend
Chart
Note: MCD stock made great progress off its October
2008 low, quickly surpassing the downtrend off its August 2008 high (straight
red line) and the November 2008 trading high (green line). Long term, it is in an uptrend (blue
lines). In late 2013, it re-set from an
intermediate term uptrend to a trading range (purple lines). The wiggly red line is the 50 day moving
average. The Dividend Growth and
Aggressive Growth Portfolios own 50% positions in MCD, having Sold Half in early
2012. The upper boundary of its Buy
Value Range is $71; the lower boundary of its Sell Half Range is $109.
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