Is McDonald’s Corporation (MCD) a Buy?

In the company’s 10-K, Wendy’s management described its efforts toward international expansion as “aggressive, yet responsible.” Management points to several initiatives for international growth, including Singapore, the Middle East, North Africa, and Japan.

While these are encouraging developments, Wendy’s will have a very hard time penetrating the international markets if it does not act soon. The company has already given McDonald’s a head start, and once a company gets too far behind the industry leader, it will be extremely difficult to catch up.

Take a bite out of McDonald’s

Wendy’s and Burger King Worldwide Inc (NYSE:BKW) are both profitable companies that pay dividends to shareholders, but in the saturated fast food industry, go with the leader. McDonald’s has over 34,000 locations serving more than 69 million people each and every day. Moreover, McDonald’s has a market capitalization greater than its two peers combined, and has the financial prowess to beat back its competition in the company’s key target markets going forward. In short, what McDonald’s Corporation (NYSE:MCD) wants, McDonald’s will get.

McDonald’s is also a leader in the realm of shareholder rewards. The company returned $1.1 billion to shareholders in the first quarter alone, through a combination of dividend payments and share buybacks. McDonald’s has increased its dividend every year since its first dividend payment in 1976.

In an investing environment where safe high-yielding stocks are hard to come by, McDonald’s pays 3.1%, better than Wendy’s and Burger King Worldwide Inc (NYSE:BKW), and also greater than the 2% yield available on the broader market. In addition, McDonald’s Corporation (NYSE:MCD) will almost certainly increase its dividend again next month, as it does every year.

As a result, investors should feel very confident in making McDonald’s a core portfolio holding, and should take any dip in the stock price as a welcome buying opportunity.

The article Is McDonald’s a Buy? originally appeared on Fool.com and is written by Robert Ciura.

Robert Ciura owns shares of McDonald’s. The Motley Fool recommends McDonald’s. The Motley Fool owns shares of McDonald’s. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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