MCD Stock Plunges, Creating Attractive Dividend Yield Opportunity

The stock price of McDonald's (MCD) has dropped significantly since March, making its dividend yield attractive at a six-year high. The annualized payout of $7.44 per share is now around 2.8%, up from the five-year average.

This comes after the company reported a slowdown in second-quarter U.S. comparable sales, which rose only 0.8% with guest counts declining. CEO Chris Kempczinski acknowledged that McDonald's 'simply didn't execute at the level we needed to.'

Despite this, adjusted earnings per share (EPS) still grew 6% to $3.38 in Q2. The sell-off is seen as an opportunity for investors to buy into a company with a strong dividend history and a potential rebound in growth.

McDonald's has made mistakes of its own, including underutilizing the recommended pricing for its new under-$3 menu and pulling back on digital offers during a period of change. However, the company is addressing these issues by cutting back on restaurant deployments and returning to digital promotions.