Dividend stocks are the top priority for consistent returns--McDonald’s

By Brian Sitnamy

Amid volatile markets given flip-flopping tariff policy and earning season as well as macro uncertainties persisting, investor sentiment by large extent is impacted by the uncertainty around earnings of major US companies and policy changes. It is a wise move for investors who are seeking consistent returns to add some attractive dividend stocks to their portfolios in the event of choppy markets.

The following is the recommendation of dividend-paying stocks which are based on in-depth analysis of company's financials and fundamentals as well as its ability to generate solid cash flows to consistently pay dividends.

McDonald’s

Fast-food chain McDonald’s(MCD) is top dividend pick which is a household company and is well-known by dividend king. The company offers a quarterly dividend of $1.77 per share. With an annualized dividend of $7.08 per share, MCD stock offers a dividend yield of 2.4%. It is worth noting that McDonald’s has increased its annual dividend for 49 consecutive years and is on track to becoming a dividend king.

Recently many analysts reiterated a buy rating on McDonald’s stock with a price target of $360, believing that MCD stock is a buying opportunity on a pullback. Analysts see near-term acceleration in McDonald’s U.S. same-store sales (SSS) and medium-term acceleration in unit growth as the major drivers for the stock, which would help narrow the current valuation gap compared to rivals Yum Brands and Domino’s. The analysts also noted improved international SSS, as the company remains a trade-down beneficiary due to its value proposition and low-price point.

Among other positive points, analysts mentioned brand power and competitive advantages in size, scale, advertising, supply chain and most up-to-date chain of restaurants. Analysts are also optimistic about MCD due to its defensive qualities and brand positioning during uncertain times, higher visibility in delivering low-single to mid-single digit SSS compared to rivals, acceleration of global unit growth to 4% to 5%, category-high operating margins and massive free cash flow generation to support dividends and repurchases.

Analysts believe that despite a soft Q1 and well-known pressures on the low-end consumer, MCD will execute well by balancing value, innovation as well as marketing for the foreseeable future.

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