McDonalds stock (MCD) has slipped a bit of late but many analysts are expecting a comeback based on changes in the business, share repurchases, and higher dividends. McDonalds is a lot like Microsoft. It is the largest and most profitable in its niche and has little room to grow. So, why own McDonalds stock? It is unlikely to double or triple in value and, some believe, only has a downside risk. McDonalds is a stalwart. It is a mega large cap stock with stability, international name recognition and lots of cash. It is one of the great dividend stocks of the widows and orphans variety. Take a look at MCD stock price over the last two decades and you will see that it has gone from $12 a share to the $80 to $100 range with two splits along the way. Thus the current $97 share price is on a stock that sold for $3 a share two decades ago. The company currently pays a dividend of 3.24 percent a year which is twelve percent on a 1993 share. This looks like the reason that people leave their money in strong stocks and answers the question why own McDonalds stock, at least for conservative investors.
McDonalds Fundamental Analysis
If you have resolved the question, why own McDonalds stock, what does the future hold for you and your shares? Many investors choose to by on a stock correction and did so when McDonalds fell into the $80 range. The company is the largest restaurant chain in the world is pays close attention to local tastes. It has the cash to expand where it is profitable and makes money on both company owned and franchise outlets. The global economic doldrums have slowed growth of McDonalds but it is in an enviable position to make money in emerging markets in Asia and Latin America. The company is steadily buying back stock. The sum of these efforts is likely to lead to slow but steady growth of the exponential sort. Think of thirty-five thousand restaurants in well over a hundred nations and the ability to take advantage of growth opportunities worldwide. If you are a dedicated long term investor, why own McDonalds stock is because it is a safe bet and likely to continue its growth throughout this century if not the next as well. Remember that the company intends to steadily increase its dividends and remember the 1993 to 2013 fourfold split multiple.
Exponential Growth of Stocks
Why own McDonalds stock is to take advantage of slow but steady exponential growth. Why own McDonald’s stock is to buy a stock that is recession proof. Ask anyone who threw away their money in the 2008 crash by putting it in over leveraged hedge funds or bought into the Bernie Madoff pyramid scheme. There are stocks that fly upwards and there are stocks that plummet downwards and they are too often the same stocks. Value investors tend to pick stocks with a good margin of safety as well as reliable growth prospects. Then, when the day is done, there is still money in the account and it has been growing exponentially all along the way. Ask yourself what is a good investment and what are safe investments. Combine the two and you have the answer to why own McDonalds stock.
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