McDonald's Dividend Yield Skyrockets as Stock Price Plummets
McDonald's stock has plummeted 26% from its February peak, pushing its forward-looking dividend yield to a multi-year high of 3%. The fast-food chain's usually strong performance has been impacted by disappointing sales and a challenging economic environment. Despite this, analysts believe the company is too good at what it does and will likely fight its way out of these challenges.
McDonald's CEO Chris Kempczinski acknowledged that the company is in a 'challenging environment' during the Q1 earnings conference call in May. The market took this as a sign of weakness, but investors should be cautious when a dividend stock's yield reaches unusually high levels. A higher yield can be a temporary entry opportunity or a result of underlying weakness.
Despite the current headwinds, McDonald's has decades' worth of great brand recognition and size, which translates into promotional firepower. The company knows exactly what to fix and how to fix it, with its response to inconsistency already underway. A plan is in place to make the chain a consumer's first choice among any competing restaurants.