Investing in restaurant stocks can be risky because there is a lot of competition in the industry. Companies also have to always evolve and keep up with the latest trends to stay relevant. But there is one restaurant stock that stands out from the rest, not only in terms of its brand, its financial condition, but also in terms of its dividend, and that is McDonald’s (MCD +0.75%).
The company behind the iconic golden arches is arguably the best restaurant stock you can own. Here’s why it’s the only one I wouldn’t think twice about relying on for its dividend, and why it can be bought without a second thought for the long term.
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The company’s super-sized margins put it in an excellent position
McDonald’s position is incredibly strong fast food industryAs evidenced by its impressive margins. Last year, it made a profit of $8.6 billion on total revenues of $26.9 billion, with a net margin of 32%. By comparison, Restaurant Brands InternationalThe company, which owns Burger King and other chains, has posted a profit margin of only 8% in the last four quarters.
The good thing about McDonald’s is that this business does not indulge in the acquisition of other brands, even though with its financial strength, it could easily do so. By investing in McDonald’s, you don’t have to worry about how other business units or brands are performing. Instead, you are investing in a high-quality brand that is a leader in the industry and has demonstrated a strong ability to adapt to changing consumer tastes over the years.
today’s change
(0.75%) $2.18
current price
$292.39
key data points
market cap
$208B
day limit
$291.03 -$294.65
52wk range
$283.47 -$341.75
volume
2.3K
average volume
3.3M
gross margin
57.29%
dividend yield
2.48%
Its impressive dividend makes it a great buy for long-term investors
McDonald’s is not only an excellent restaurant stock to own because of its financial strength, but it is also an excellent restaurant stock. Top Dividend Growth Stocks. Last year, it announced a 5% dividend increase, making it the 49th consecutive year it has increased its payout. When the company inevitably raises its payout again this year, it will hit the 50-year mark, putting it in the dividend king category.
The company has been growing its payout generously over the years, making it a top buy-and-hold choice for income investors. Currently its yield is 2.5%, which is more than double S&P 500 Average 1.1%. With a stable business, excellent margins and a great brand, this is one of the few stocks I would be comfortable with not just for years but even decades, because not only can you benefit from the company’s continued growth, but your dividend income will also increase significantly in the long term.
David Jagielski, CPA No positions in any of the stocks mentioned. The Motley Fool recommends Restaurant Brands International and recommends the following options: long January 2028 $320 calls on McDonald’s and short January 2028 $340 calls on McDonald’s. The Motley Fool has one Disclosure Policy.