The dividend increases will likely keep coming as McDonald’s continues to turn its low-margin company-owned restaurants into high-margin franchises here in the U.S. market. When that happens, it frees up capital for additional share buybacks or increased dividends. And it gets even better: Even when the company-owned store is sold, McDonald’s typically retains the rights to most of its buildings and property, and that remains on the books at cost — meaning the company owns a plethora of undervalued real estate.
If McDonald’s proves it can adapt through modernizing its stores and upgrading its menu, it could provide an excellent opportunity for long-term investors. The downside in owning McDonald’s is limited, as its brand image and low-cost position will continue to provide strong cash flow and earnings even during rough times; the Golden Arches aren’t going anywhere. If you’re looking for exciting growth stocks, you missed the boat on McDonald’s. However, If you’re looking for a strong, financially stable company that consistently returns value to shareholders and still has remaining sales growth globally, McDonald’s Corporation (NYSE:MCD) looks like a solid investment for you.
The article Buy, Sell, or Hold McDonald’s? originally appeared on Fool.com and is written by Daniel Miller.
Fool contributor Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill, McDonald’s, and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill, McDonald’s, and Panera Bread.
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