Wednesday, January 19, 2011

McDonald's: A Fairly Valued Dividend Champion

Like any disciplined long term investor I have a ‘wish list’ of stocks that I purchase on pullbacks. For me, McDonalds has always been one of those companies.   Not only is the food cheap and delicious, the stock is fairly valued and yielding a substantial dividend. Plus I’m an American. It’s engrained in our DNA to eat Big Macs. 

Whether you like it or not, McDonald’s hamburgers are as American as apple pie (which coincidentally you can get from its dollar menu). I know there are headwinds to the company, the health risks, rising input costs, market saturation, bad publicity, etc.  Heck, even I saw Super Size Me.  I’ll admit that guy put on a little weight, but he looked healthy enough… in that 17th century European Royalty sort of way. 

Hey, any press is good press. But no matter how you feel about the golden arches, McDonalds possesses one of the strongest brand equities of any company worldwide and will continue to expand its empire into emerging markets.

What it does:
Just in case you live in a cave, McDonald’s sells cheeseburgers, chicken products, French fries, breakfast items, soft drinks, shakes, coffee and desserts. It also derives a considerable amount of revenue from the rent of its properties to franchisers. But mostly, it provides double cheeseburgers for my family on road trips.

The Fundamentals:

Fundamentally, MCD is a sound stable investment. It has provided its share holders with an impressive 21% Return on Equity over the last 7 years, and a ROE of 18% for the past 15....

Read the rest of the article at Seeking Alpha (HERE)


  1. I agree.

    It's neither overvalued nor undervalued, but fairly valued. A solid dividend, great international exposure, defensive, mediocre balance sheet, and shareholder-friendly management.

  2. Investors who search for a steady income and a solid growth should take a look at stocks from the Dividend Champions list. Dividend Champions are stocks that increased their dividends year after year over a period of 25 or more consecutive years. Here is a current dividend yield table of all Dividend Champions sorted by years of increasing:

  3. MCdonald's is a very high profile stock. Its most likely the best known company in the world.