My Top 2 Stocks: McDonald’s Corporation’s (MCD) and Chevron Corporation (CVX)

Page 1 of 2

Up until my late 40s, my investments had been limited to mutual funds. I followed the stock market, but funds made more sense to me until competition drove trading commissions down and I had built up enough of a nest egg to add individual stocks to the mix. After doing some reading into investing styles, dividend growth investing seemed like the right fit for me, and my two largest stock holdings have what it takes to keep giving annual raises to shareholders.

Chevron (CVX) Set to Win Lithuanian Shale Gas LicenseCorporation (NYSE:CVX)
Chevron Corporation (NYSE:CVX) was one of the first individual stocks I bought, and the reasons it joined my portfolio in early 2007 are still valid today.

The stock trades in value territory, with a current price to earnings ratio around 9.

It has a good dividend yield of about 3%.
A low payout ratio and earnings growth prospects should allow the annual raises to continue.

To put a Foolish cap on Chevron’s dividend growth history, it recently joined the S&P Dividend Aristocrats, a list of companies that have raised their dividend payouts every year for at least 25 years.

Why Chevron Corporation (NYSE:CVX) over other energy companies? As a U.S. investor, I wanted to stay close to home, which gave Chevron, Exxon Mobil Corporation (NYSE:XOM), and ConocoPhillips (NYSE:COP) an edge over the non-U.S. based majors. I also wanted a company with exposure to different segments of the energy industry. At the time I made the decision, Chevron Corporation (NYSE:CVX) was less expensive based on P/E and had a higher dividend yield than ExxonMobil; I honestly don’t recall why ConocoPhillips didn’t make the cut. Today, Chevron Corporation (NYSE:CVX) still has an edge over ExxonMobil in dividend yield, and P/E ratios are nearly identical. ConocoPhillips recently spun off its refining operations, so it no longer has as wide a range of operations — for better or worse — as Chevron Corporation (NYSE:CVX) or ExxonMobil.

Even though I still own the stock, a Foolish investor might ask if I would buy Chevron Corporation (NYSE:CVX) today. The only reason I would not add to the position today is it’s already a large piece of my portfolio. If it weren’t one of my largest holdings, I’d be adding more.

McDonald’s
2012 wasn’t full of Happy Meals for McDonald’s Corporation (NYSE:MCD)‘s shareholders as the share price took a 12% dive. Among the 30 Dow Jones Industrial Average stocks, only Hewlett-Packard Company (NYSE:HPQ) and Intel Corporation (NASDAQ:INTC) fared worse. Concerns over sales in the weak eurozone and uncertainties over a new CEO kept pressure on the stock price. But, McDonald’s Corporation (NYSE:MCD)’s continued to do exactly what I bought it for: pay the dividend and give shareholders a raise, continuing a streak dating back to 1976.

My CAPS pitch from 2008 sums up the reasons I bought McDonald’s Corporation (NYSE:MCD)’s and continue to hold it: “Growing business, decent dividend, solid history of dividend hikes. Business should be pretty steady through a slowing U.S. economy while benefiting from growth overseas.” The U.S. economy may not be slowing anymore, but it sure isn’t growing much, and overseas growth is still a key part of the business strategy at the Golden Arches.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!