CA - McDonald's: A Top Dividend Growth Play

2024-06-13 05:56:40 ET

Summary

• McDonald's has achieved 13 straight quarters of revenue growth, despite high inflation hurting consumer spending.
• The fast-food chain plans aggressive expansion, with a goal of reaching 50,000 global restaurant units by FY 2027.
• McDonald's is a 'Dividend Aristocrat' with consistent profitability and potential for dividend growth.
• Moderating inflation could be a catalyst for a revenue re-acceleration.
• Shares trade at a bargain 19X P/E ratio and yield 2.6%.

McDonald’s ( MCD ) is looking back on a 13-quarter streak of uninterrupted, comparable sales growth, despite high inflation weighing on consumer spending in the last two years. The fast-food chain is, despite headwinds, generating consistent, low-single digit growth in comparable revenues and continues to focus aggressively on expansion, both in the U.S. and abroad. I believe McDonald’s is set to benefit from moderating inflation -- a key catalyst for accelerating growth in system-wide sales -- and the company’s aggressive unit growth plan for FY 2024 and beyond indicates significant top line expansion potential as well. Shares also trade below the 1-year average price-to-earnings ratio, which implies a favorable risk profile for long-term investors as well!...

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