McDonald’s (NYSE: MCD) is down for the last week, month, quarter, six months and year of market action (chart below). While the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) are up for 2014, McDonald’s is off by nearly 4 percent. The stock of McDonald’s is now at a 52-week low.
That naturally raises the issue of is it time to buy McDonald’s?
There is certainly no shortage of reasons to buy McDonald’s, as detailed in previous articles. The recent numbers were not that good. For shareholders, that has been a continium. It is becoming obvious that the high growth days of McDonald’s are over.
But that should not keep long term investors away from the stock for a variety of factors.
McDonald’s is very profitable. The profit margin of 19.50 percent is about twice that for the average member of the Standard & Poor’s 500 Index. No matter what, that is very important for any business: if it is not making money, there should be long term concerns unless there are extraordinary factors like the massive construction program for Amazon (NASDAQ: AMZN).
There is also a bullish trend projected for its earnings per share.
For this year, earnings per share growth is 3.50 percent. Over the next five years, it is projected to be 6.6 percent. That is a very positive outlook by the Wall Street analyst community.
Shareholders are paid well to own the stock.
McDonald’s is a Dividend Aristocrat. It has increased the amount of its dividend annually for at least the past quarter century. The present dividend yield is nearly 3.6 percent. The average for a member of the Standard & Poor’s 500 Index is under 2 percent. The shareholders of McDonald’s get a raise every year by just not selling the stock when the amount of the dividend is increased.
With both the earnings and amount of the dividend looking to increase, so should the total return for long term shareholders of McDonald’s.