Top Dividend Stock #7: McDonald’s (MCD)
Dividend Yield: 3.39%
YTD Performance: -1.61%
52-Week Return: -4.21%
McDonald’s (MCD) has struggled to gain momentum in 2014, even as competitors Burger King (BKW), Wendy’s (WEN) and Chipotle Mexican Grill (CMG) have all made year-to-date gains. Part of the reason it has lagged behind is that comparable-store sales have been on the decline.
Earlier in March, MCD reported that domestic comp sales fell by 1.4%, while overall comp sales fell by just 0.3% thanks to slightly better results in foreign markets. However, the iconic fast food chain got a bit of a break when company CFO Pete Bensen announced that MCD would be taking further steps to return more cash to its shareholders.
Over the past three years, the company has been increasing its dividend steadily and has returned more than $16 billion to its investors through both dividends and share buybacks. Additionally, MCD has been testing a new breakfast lineup that should give it a competitive edge against companies like Starbucks (SBUX) and Dunkin Brands (DNKN) — both of which pay measly dividends of less than 2%.
Therein lies the advantage to owning MCD over its rivals — its 3.4% yield. If MCD is able to increase its market share in the breakfast space, the additional revenue could be used to fund greater cash distributions in coming quarters.