Buy Mcdonald Stock

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Buy Mcdonald Stock

Should You Buy McDonald's Stock For Dividends?

McDonald's has a dividend yield of 2.6%, which is quite reasonable. Although it is not high, it is a lot more than what other blue-chip stocks like Costco pay!

While the McDonald's dividend yield is good, its business growth is a little slow. The recent data showed a 9% increase in revenue in Q3. The total revenue in Q3 was $6.52 billion, and most of it was due to changes in foreign currency.

McDonald's Struggles With Slow Growth

If we look at the numbers in terms of constant currencies, the revenue growth was only 4%. Meanwhile, global comparable sales were up by 3.8%, which is good but not that high.

The CEO of McDonald's also made it clear that the earnings might get a little worse in the near future. But despite the slow growth, McDonald's continues to pay dividends without fail!

The company is paying a healthy dividend yield and also continues to introduce new share buyback programs. This means investors can also benefit from potential capital gains in addition to the dividend payments.

The McDonald's stock is trading at a forward P/E of 23, which is near its long-term average. The management is also planning to spend $3.7 billion on supporting 2000 new restaurants. So, the free cash flow of McDonald's will definitely come under pressure.

The bottom line is that McDonald's offers a good dividend yield. Although the company is struggling due to consumer weakness, things could improve in the coming quarters.

For the investors with a long-term mindset, McDonald's can be a good option because of its dividend yield. But for those who also want capital gains, then it would be worthwhile to look at other options in the stock market.

Some other options from the US market are Coca-Cola, Verizon Communications, and 3M. All of these have a dividend yield and are also blue-chip companies.

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