One interesting dividend pick that many investors may not be considering right now is McDonald’s Corporation (NYSE:MCD). The company has a current dividend yield of only 2.4%, making this a relatively low-yielding stock when compared to other similar companies in the consumer defensive category.
That said, I think McDonald’s has a ton of potential for dividend growth over time. Supported by extremely solid, growing cash flows, McDonald’s has a proven track record of dividend growth in the past. Through the pandemic, this company actually raised its dividend by a small amount, signaling the company’s management team is confident with where cash flows are right now, and where they are expected to be long-term.
The concern some investors bearish on McDonald’s have right now is the potential for wage pressures due to inflation and the incoming Biden Administration. Additionally, pandemic-related lockdowns and reduced guest traffic related to the ongoing pandemic are likely to hurt McDonald’s top and bottom lines in the near-term.
That said, I think this is a company that has proven its long-term value as a buy and hold opportunity for decades. I think this is a company poised to bring home high-single digit growth in terms of operating income and overall revenue over the long-term, a factor that should offset any short-term concerns around labour costs and lower short-term guest volumes. There is a lot of room for growth with this mega-cap company, and I think this bodes well for long-term income investors as well.
Invest wisely, my friends.
