McDonald’s Corporation: MCD Stock a Buy Despite Market Uncertainty

Although some believe the fear in the current market is overdone, others who believe recession is on the horizon are investing in dividend stocks for a continuous income stream.

McDonald’s Corporation: MCD Stock a Buy Despite Market UncertaintyThat’s because portfolios with safe dividend stocks are likely to remain solid even as the market turns violent. One such company is McDonald’s Corporation (MCD) — a cheap fast food chain that is likely to weather Wall Street’s stormy forecasts.

That’s because MCD stock is not as sensitive to economic ups and downs as many other stocks, and the company’s dividend payments are likely to continue, possibly even grow, even if the economy falters.

While it’s impossible for any company to completely insulate itself from a recession’s far-reaching effects, MCD stock is one of the best bets for investors who believe that the coming year will be fraught with economic uncertainty.

MCD Stock: A Comeback Story

Just two years ago, things were looking dire for McDonald’s stock as the company was struggling with consumers’ shifting preference toward healthier dining options. While that is still a worry, the golden arches is dealing with the changing fast-food landscape well under the leadership of new CEO Stephen Easterbrook.

And Easterbrook is absolutely killing it. Last year, he made several changes to improve MCD’s image, and we’ll likely see that pay off this year. For starters, Easterbrook modernized many of the chain’s locations and replaced the dollar menu with a “Pick 2 For $2” option.

Easterbrook also tapped into the all-natural food trend by pledging to improve the quality of ingredients used by doing away with antibiotic-treated chicken in favor of cage-free eggs.

McDonald’s All-Day Breakfast

Perhaps Easterbrook’s most compelling change was running the breakfast menu at any time throughout the day.

MCD’s all-day breakfast decision jumpstarted sales and got people through the door, and a study by NPD Group Inc. showed that over 30% of those who took advantage of late breakfast service hadn’t been visiting the chain when McMuffins were only available until 10:30 am.

Those figures suggest that the extended hours expanded McDonald’s ability to attract new customers rather than simply encouraging existing customers to buy cheaper menu items, as many analysts had feared.

McDonald’s fourth-quarter results showed that the company’s efforts are paying off. Same-store sales growth rose by 5.7% and the firm beat estimates with $1.31 per share on revenue of $6.34 billion.

So What About The Future?

Last year was a transition period for McDonald’s: The company underwent several changes, experimenting with new growth avenues to revive its tarnished brand.

Although it’s unlikely that MCD stock will deliver impressive gains in the short term, it’s still a solid long-term bet that should continue to pay out dividends despite market turbulence and economic uncertainty.

MCD stock holders currently enjoy a dividend yield of around 3%, and many expect an increase in the year to come. Since it began paying dividends in 1976, Mcdonald’s has increased its dividend payments every year, so there’s a good chance that, at very least, the company will uphold its current dividend no matter what the market conditions look like.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.

More From InvestorPlace

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC