Why McDonald’s Dividend Will Continue To Grow, Even In A Recession

It would not be an exaggeration to say that in just about every country in the world today, McDonald’s (MCD) is a household name. The company that is famous for its Happy Meals and Big Machas found a way to grow around the world, in part by tailoring its offerings to its local customers.

McDonald’s is undoubtedly a growth success story over its company history, and in turn, shareholders have been rewarded with rising dividends since 1976. For the past 43 years, McDonald’s has managed to grow its dividend payment to shareholders, despite varying economic conditions around the world.

Because of its impressive dividend history, we view McDonald’s as a blue chip stock, which we consider to be the safest dividend stocks in the market today due to their consistent growth and durable competitive advantages.

Because of its long history of steady dividend increases, we view McDonald’s as a blue chip stock.

McDonald’s is one of just 57 Dividend Aristocrats, a group of S&P 500 stocks that have increased their dividends for at least 25 consecutive years.

This track record of dividend excellence is certainly attractive to shareholders, and McDonald’s continues to be a favorite for growth investors, as well as those seeking a meaningful, growing dividend payment.

Business Overview

McDonald’s is the largest fast-food operator in the world with 38,000 locations in more than 100 countries worldwide. The size and scale the company operates on is unparalleled in terms of physical presence. Only about 7% of the company’s locations are owned by McDonald’s; the remaining 93% are franchised.

McDonald’s has about 5,000 unique global franchisees, as most franchisees own more than one location. McDonald’s has undergone a years-long transition from a more heavily company-owned store mix, to franchising nearly all of its locations as part of its growth and capital return strategy, and it owns fewer than 3,000 locations today.

Revenue topped out at $28 billion in 2013 before the refranchising effort began, and today, McDonald’s produces around $21 billion in annual revenue. Shares have performed extremely well in recent years, and as a result, the company’s market capitalization is up to $157 billion.

McDonald’s has invested in menu innovation in recent years, such as premium coffee through its McCafe platform, more upscale desserts, as well as premium burgers that have helped drive traffic and higher average ticket prices over time.

McDonald’s is positioning itself in the market as everything to everyone, from breakfast items and premium coffee drinks to the lunch hour with its chicken sandwiches, premium burgers, as well as its long-time favorites. The formula has worked quite well in recent years, as McDonald’s has generated strong earnings growth.

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