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McDonald’s Stock Price Dip Is An Entry Point for Dividend Investors

McDonald’s (NYSE: MCD) stock price plunged sharply in the past couple of months amid negative sentiments for the restaurant industry. MCD shares are down almost 12% from 52-weeks high of $221 that it had hit three months ago. The change in top management has also added to negative sentiments.

Restaurant same-store sales grew only 0.06% in the last month, the second straight month of sluggish growth based on TDn2K report. The report shows comparable traffic dropped by 3.1% year over year.

Moreover, the report indicates third-party delivery services are reducing off-premise consumption. Although McDonald’s stock price dropped significantly in the past couple of months, the company’s fundamentals appear strong compared to industry trends.

MCD McDonald's Corporation daily Stock Chart

McDonald’s is Outperforming Industry Trends

Its global comparable sales grew by 5.9% in the third quarter. The growth is driven by a 5.6% boost from the international segment and a 4.8% increase in the United States.

Its global comparable sales growth of 5.9% topped the consensus for a 5.5% increase. The latest quarter was the 17th consecutive quarter in a row of global comparable sales growth.

The company has also experienced growth in revenues and earnings compared to the same period last year. Its third-quarter revenue grew 1% from the earlier year period. The company also appears in a strong cash position to offer cash returns to investors.

McDonald’s Stock Price Offers a Buying Opportunity for Dividend Investors

McDonald’s is considered a dividend king amid its long dividend growth history. It has increased the quarterly dividend in the past 43 successive years. It currently offers a quarterly dividend of $1.25, yielding around 2.59%.

MCD returned $2.4 billion to shareholders in the third quarter through dividends and share repurchases. It has returned almost $22 billion to investors since 2016. The company plans to return $25 billion to investors according to its three-year plan. Fortunately, the company appears in a robust financial position to achieve its plans. Therefore, analysts are seeing the dip in McDonald’s stock price as a buying opportunity for long-term dividend investors.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.