How McDonald’s (MCD) Maintains its Status as a Leading Income Stock

McDonald’s Corporation (NYSE:MCD) is included among the 11 Best Income Stocks to Buy According to Hedge Funds.

A cook in a busy kitchen assembling cheeseburgers for orders.

McDonald’s Corporation (NYSE:MCD) is easily recognized by its golden arches, but most of its locations— around 95 percent— are run by franchisees rather than the company itself. These franchised restaurants generate roughly 60% of the company’s yearly revenue.

Through its franchise model, McDonald’s Corporation (NYSE:MCD) earns income by collecting a percentage of sales as royalties and charging rent. Since franchisees handle much of the capital spending, this setup reduces costs for the company. However, in the recent quarter, McDonald’s reported a 1% decline in same-store sales. In the US, where around 40% of its sales come from, comparable sales dropped by 3.6% due to lower customer traffic. As a result, adjusted operating income also declined by 1%.

McDonald’s Corporation (NYSE:MCD) is just two years away from becoming a Dividend King. It has been raising its payouts for 48 consecutive years, which makes it one of the best dividend stocks for income investors. The company currently offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.36%, as of July 31.

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Disclosure: None.