In a previous article I highlighted the impressive investment history of McDonald's (NYSE:MCD) along with why this history would be quite difficult to repeat. The basic idea was that McDonald's had a variety of components working in its favor over the past decade: an increasing profit margin, greatly reduced share count, higher earnings multiple and an expanding dividend payout ratio. These factors allowed 2% annual revenue growth turn into 15% yearly investment gains.
In the past McDonald's had all of these components working in its favor to turn 2% yearly revenue growth into 15% annual investor returns. In the future you might expect the margins, share repurchases and dividend to continue to play a positive role in the process, while the valuation multiple could be a drag. From this view you get vastly different results: the same 2% annual revenue growth, but investor returns that come in at "just" 4% to 5%. Of course this is no great tragedy - a $10,000 investment could still be expected to turn into $15,000 - but it's certainly a far cry from what was previously achieved. A conservative view of McDonald's future (based on current pricing) reveals a positive, but perhaps not compelling story.
Source: Seeking Alpha
Related Articles:
- 5 Industrial Strength Dividend Growth Stocks With Yields In Excess Of 3%
- Finding Low Risk Dividend Stocks
- 10 Fun Facts That You Might Not Know About Microsoft
- 5 Dividend Stocks To Beat The Wall Street Giants
- A Disciplined Approach To Dividend Growth Stocks
A Conservative View Of McDonald's Future
Posted by D4L | Tuesday, January 26, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
Are you sick and tired of low interest rates? Certificates of deposit pay next to nothing. Bonds yield only three or four percent a year. Su...
-
If you’ve been following this column, you’d know that monthly dividend stocks tend to come from two main types of businesses: real estate an...
-
Late last year, Wall Street had a bit of a panic attack when Fed chairman Jerome Powell suggested this tightening was on autopilot. While th...
-
These three picks are all up more than 10% so far in 2019. The three themes are LNG, specialized healthcare, and small banks. The yields ran...
-
Showing resilience during a tough week was a group of stocks that has not been heard from much in the past two years. A group that has been ...
-
This company makes a compelling value proposition on the dip for DGI investors. The REIT has strong portfolio stats and a conservative AFFO-...
-
If a company pays, say, 14%, you would only need to put up $71,429 to earn $10,000 in annual dividends. Of course, we know that double-digit...
-
This company makes a compelling value proposition based on valuation, risk/reward, yield, and upside potential. I added this hotel REIT las...
-
Stocks with high dividend yields can be great, but if a stock has a high dividend yield and also has lots of long-term growth potential and ...
-
There are a lot of reasons to consider adding high-dividend stocks to your portfolio. They offer a steady income that can help ease the pain...

0 comments
Post a Comment
Post a Comment