McDonald's (NYSE:MCD): Dividend Idea Of The Week - A Restaurant Leader With 3.55% Yield And 7.64% Upside Potential

Weekly Dividend Stock Ideas Researched by The Dividend Yield Weekly. Our weekly Dividend Idea is the leading restaurant operator and franchises company McDonald's (NYSE:MCD). McDonald's owns and franchises its restaurants all over the world. By the end of 2011, the company had 33,510 restaurants in 119 countries, of which 27,075 were operated by franchisees and 6,435 were operated by the company. McDonald’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack Wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages. More on Reuters here. 

MCD operates a proven business model with a well diversifed global structure. The company is a strong established Dividend Champion and raised dividends over a period of 36 consecutive years with a double-digit long-term growth rate. Morningstar estimates the fair value of the company at $94.0, an upside potential of 7.64% compared to the previous close price of $87.33.

We like the strong brand and consumer focus of McDonald's. The huge cash flow of $7.1 billion allows the company to pay $2.6 billion dividends and to repurchase $3.0 billion own shares as of fiscal year 2011. Roughly $2.7 billion were used for CAPEX. 

The Best Dividend Paying Restaurant Operator

The Highest Yielding Stocks From The Restaurants Industry Researched By Dividend Yield - Stock, Capital, Investment. Food store concepts are interesting growth opportunities. If they also pay good dividends, they should be a part of your portfolio. I analyzed the restaurants industry by the best yielding operator. Nearly 50 companies are listed of which 16 pay dividends. The average industry yield amounts to 2.4 percent; price to earnings ratio is 21.4.

Best Yielding Restaurant Stocks

Restaurant Stocks With Best Dividend Yield by Dividend Yield - Stock, Capital, Investment. I screened U.S. listed stocks from the restaurant industry with a positive dividend yield. In total, 14 companies pay dividends of which 6 have a yield of more than 3 percent.

Here are the results:

Best yielding restaurant stocks (Click to enlarge)

Related stock ticker symbols:

ARKR, DRI, BAGL, PFCB, BOBE, FRS, MCD, CEC, EAT, TXRH, CBRL, YUM, WEN, THI

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Dividend Stock Idea of the Day – Yum Brands (NYSE:YUM)

Dividend Stock Ideas by Dividend Yield – Stock, Capital Investment. Our Dividend Idea of the day is restaurant franchise operator Yum Brands (NYSE:YUM). The current dividend yield amounts to 1.8 percent.

YUM! Brands, Inc. (YUM) is a quick service restaurant (QSR) company, with more than 37,000 units in more than 110 countries and territories. YUM through its five concepts of KFC, Pizza Hut, Taco Bell, Long John Silver’s (LJS) and A&W All-American Food Restaurants (A&W) (the Concepts), the Company develops, operates, franchises and licenses a worldwide system of restaurants, which prepare, package and sell a menu of competitively priced food items. Units are operated by a Concept or by independent franchisees or licensees under the terms of franchise or license agreements. In addition, the Company owns non-controlling interests in entities in China who operate similar to franchisees of KFC and a non-controlling interest in Little Sheep, a Hot Pot concept. Through its Concepts, YUM develops, operates, franchises and licenses a worldwide system of both traditional and non-traditional QSR restaurants. (More on Reuters).

Here are some Fundamental Figures:

Sales	11.42 Bil
Income	1.18 Bil
Net Profit Margin	10.51%
Return on Equity	83.58%
Debt/Equity Ratio	2.01
Revenue/Share	23.52
Earnings/Share	2.43
Book Value/Share	3.82
Dividend Rate	1
Payout Ratio	39.00%

Here are some Pricing Figures:

Price/Earnings	22.9
Price/Book	14.5
Price/Sales	2.4
Price/Cash Flow	13
Dividend Yield %	1.8
Forward Price/Earnings	17.3
PEG Ratio	1.7
PEG Payback (Yrs)	9.5

Here are some Trading Figures:

Last Price	55.58
52-Wk High	57
52-Wk Low	39
Volume	NA
Avg Daily Vol (13 Wks)	3.51 Mil
50-Day Moving Average	54.75
200-Day Moving Average	51.04
Volatility (beta)	0.99

Sales and Income of Yum Brands (Click to enlarge)

Do you have further dividend ideas you want to share with our audience? Please contact us and submit your stock idea here: dividendyields@googlemail.com

Best Yielding Restaurant Stocks

Here is a current sheet of 14 stocks from the restaurant industry that pay dividends. The whole industry contains 53 companies with a total market capitalization of USD 671 billion. 14 stocks pay dividends. The average industry margin amounts to 9.8 percent.

Among the best yielding stocks, the average price to earnings ratio amounts to 16.63 while the forward price to earnings ratio is expected at 14. In average, the dividend yield amounts to 2.63 percent. Price to book ratio is 3.85 and price to sales ratio 1.10.

Here is the table for a detailed view:
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Best Yielding Restaurant Stocks (Click on the table to enlarge)

Related stock ticker symbols:
ARKR, BAGL, MCD, FRS, DRI, BOBE, EAT, PFCB, CEC, TXRH, CBRL, YUM, WEN, THI

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14 Restaurant Concepts That Give You A Lunch

Here is a current sheet of 14 listed restaurant stocks that can give you a lunch in economic difficult times. The average dividend-yield amounts to 0.97 percent while the average P/E ratio is 23.03. Price to book ratio is 6.95 and price to sales ratio 1.38. The whole industry offer investors a dividend yield of 2.6 percent. Price to earnings ratio is 19.0 and price to book ratio 8.2. Total debt to assets ratio is 55.3 whence an average return on equity of 56.0 percent is realized. The companies are working with an operating margin of 9.85 percent. Stocks are traded at AMEX, NYSE, NASDAQ as well as being part of the Dow Jones, S&P 500 or Nasdaq Composite.

Here is the table of 14 restaurant stocks with some fundamentals:

14 Restaurants (Click to enlarge)

Related stock ticker symbols:
MCD, YUM, SBUX, DRI, WEN, JACK, CMG, DPZ, PZZA, RRGB, TAST, SONC, MCS, MSSR,

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Six Restaurants and how a Food Inflation could hit them

Restaurants are value added downstream companies within the food segment. Most of the companies have a low gross margin which is in a range between 25 to 35 due to high precursors purchases. What happens if food commodity prices rises in the long-run? Will companies increase prices and push sales to keep income stable?

Here is a list of companies acting within the restaurant sector and affected by commodity prices.

Big Restaurants and Fundamentals (Click to enlarge)

At first, higher commodity prices lead to lower gross margins. Companies have to increase prices to keep net profit on stable levels. Here is the decisive factor hidden: Does the company have so much pricing power to establish new rates without losing volumes and at least market share? If volumes goes down, the profit margin follows if other cost factors couldn’t reduced.

Food is a product for that it is difficult to enforce high prices as for luxury products. It is tough to brand food because people always count in price per liter or kilo. A successful company within the sector has to organize its business in a way that allows the company to sell high volume or to offer an additional service. This is the only way to generate higher profit margins.

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