Top Dividend Stocks #7: McDonald’s (MCD)
Dividend Yield: 3.23%
YTD Performance: +3.38%
52-Week Return: -0.57%
McDonald’s (NYSE:MCD) certainly struggled over the last year, but the stock has actually come into favor in the last few months as capital rotates into names that trade at low valuations. MCD carries a P/E ratio of 18.1 compared to the 28.1 industry average, and investors have taken notice.
MCD reported earnings last week with mixed results. First-quarter revenue came in as expected, at $6.7 billion, but the company missed EPS estimates of $1.24 by three cents. While McDonald’s leads its peers in terms of revenue, its long-term growth prospects lag significantly against Burger King (NYSE:BKW) and Chipotle (NYSE:CMG).
The company is also experiencing pressure from competitor and owner of Taco Bell, Yum Brands (NYSE:YUM), which is trying to lure in more customers with its new “Waffle Taco.” Approximately 25% of MCD’s sales derive from its breakfast menu, a number that YUM is actively trying to decrease.
It’s unlikely that MCD will see the same kinds of growth rates as its newer rivals, but you can earn a solid 3.23% yield from this fairly valued, blue-chip dividend stock if your portfolio can stomach the recent setbacks.