01/22/2014 7:00 am EST
Russ Kaplan, editor of the Heartland Advisor, looks to the Big Mac as his candidate for the top dividend stock for 2014. Here's his outlook for the fast food restaurant operator.
McDonald's Corporation (MCD) was founded in 1940, and, over the years, they created a strong, loyal customer base. Their menu has broadened, but they keep their timeless favorites.
At a reasonable price, McDonald's has a dividend yield of 3.3%. That income is solid and ranks up with the yields on many bonds.
McDonald's has a history of raising their dividend, which bonds will never do. Since 2009, the dividend has risen five times, and will likely keep rising over time.
In addition to the attractive yield you will receive, McDonald's has the potential for excellent capital gains in the future. It's currently selling in the $95 range, down from this year's high of $104.
The reason it fell was that quarterly revenue has been down with the concern about the need for healthier foods. McDonald's has often faced that, adapted, and always bounced back.
It has a strong international presence, 68% of sales come from outside the United States. This protects it from any downturns in a particular country or particular region. Incomes, and popularity of its products, are particularly on the rise in developing countries.