McDonald's Generous Cash Payouts Fail to Lift Stock

McDonald's shareholders have received $37 billion in cash over the last five years, but the stock has still fallen behind the market. This is due to the company's efficient model, which runs on a high operating margin of 46%, generating $7.76 billion in free cash flow over the past year.

The cash was used for dividends and share repurchases, totaling $23 billion and $14 billion respectively. However, despite reinvesting dividends, holding McDonald's stock produced a total return of only +23% over the last five years, far behind the S&P 500 index fund's return of +87%.

The company's core U.S. business is struggling, with comparable sales growth of just 0.8% in the second quarter, citing inconsistent franchisee execution and overwhelmed restaurant teams as major issues.