Who Wins the Fast-Food Stock Fight?
Weigh up this comparison before placing an order for America’s iconic restaurant or its Canadian counterpart, writes John Heinzl, reporter and columnist for Globe Investor.
You can debate all you want about who has the better coffee or breakfast sandwich—McDonald’s (MCD) or Tim Hortons (THI). But today we’re tackling a more pressing question: Which fast-food chain has the more appetizing stock?
Certainly, Tims and Mickey D’s have plenty of things in common. Both companies pay dividends. Both have a track record of raising their dividends. And, unless consumers develop a sudden preference for tofu and Brussels sprouts, both will be hiking their dividends for years to come.
What’s more, because they sell inexpensive food, both companies should hold up relatively well even if the economy goes into the deep fryer.
But there are also some key differences that investors need to consider before they fork over their cash. Let’s see how the two stocks stack up on a range of measures.
Since declaring its first dividend in 1976, McDonald’s has increased its payment for 35 consecutive years. Just as customers know what to expect when they order a Big Mac, investors know they’ll get a dividend increase from McDonald’s every September.
Tim Hortons has only been paying dividends since 2006, when it went public, although it, too, raises its dividend annually. Advantage: McDonald’s
McDonald’s dividend has increased at a compound annual rate of 15% over the past five years.