McDonald’s Corp. is one of the well-known blue chip stocks. Want to find out more?
As a company which had been public for more than 50 years and had so much growth and enterprise all over the world, McDonald’s can definitely be called a super-tycoon.
Watching the recently released picture “The Founder” we can see for ourselves how this great American fast food empire was built. Nearly 40,000 fast food restaurants had been built all around the world around this iconic brand.
But what about it’s stock, what is it that we don’t hear too much news about McDonald’s stock, maybe it’s already obsolete? The answer is not at all.
It’s not really a tech stock so it clearly isn’t as popular these days as the well-known internet giants are but there is still so much value in McDonald’s! Peter Lynch, a legendary investor obtained a large amount of profits for his Magellan fund from McDonald’s, Walmart, Fannie Mae, General Electric and more. All of these are inevitably blue-chip stocks.
Companies like McDonald’s are and have been so successful because of their simplicity in every field: Brand, customer service and operations. Easily understandable, known by everyone and seems to never be going away, at least in the near future.
Peter Lynch, Warren Buffet and Charlie Munger always regard simplicity as the number one factor in investing and all other parts of our life. People should just never be making things more complicated than they actually are.
People miss this, I catch myself doing that too. When a company is so stable in terms of growth, which is also reasonably big and has been out there with no bad years we tend to “pass it over for others to buy“.
McDonald’s stock chart is proof that you practically cannot lose investing in such grounded companies like it. You will see the interactive chart below. It shouldn’t be so difficult do take what’s presented on the plate and not to look for risky things that could cost you a fortune.
There aren’t many companies like it in terms of the work ethic. Only Amazon comes to mind. There have been reports of treating employees harshly and many other unattractive stuff but this is all for the sake of the customer.
Companies like these put the customer first on their pedestal. Working conditions are not the best, but the company will strive because of the immense amount of teamwork and productivity. The food preparation system of McDonald’s is genius without a doubt.
Much competence and innovation leads to long-term, stable super success.
The company stock also had a decent recovery after the coronavirus outbreak market crash. Compared to other, small and large restaurant enterprises it did very well. Again, it all goes back to innovation.
Friends of McDonald’s like Just Eat, DoorDash, Uber Eats and others are delivering burgers and fries to people’s homes during the pandemic. It’s still the number one pick for families, people in a rush and everyone else.
When no options are left, the only way to get ahead is to innovate and experiment with new things that might or might not work.
McDonald’s innovates in the most unexpected ways. Not only in productivity but marketing as well. For Example, have you seen some blue-chip company having a deal with rappers like Travis Scott? Well now you have.
The fast food giant had some rapid customer growth after partnering with Travis Scott. He sent sales through the roof to say the least. It’s definitely nice to see such large enterprise thinking outside the box and taking the uncomfortable but worthy steps to maintain it’s worldwide growth.
Another interesting fact to consider thinking about is that McDonald’s only makes only few cents after each single burger sold. The main revenue comes mainly from the “upsells” it does: fries, coke, McFlurry ice cream, foods for children, etc.
Because who only wants a burger when they come to McDonald’s? And the company leverages that and turns it into a brilliant marketing plan. Not to mention, different regions and continents have a variety of new meals and burgers nobody outside of them has heard of, so there is a huge amount of tourists eager to try them out.
It is worthy to say that McDonald’s is also partnering with Beyond Meat to include vegan, gluten free burgers and sandwiches of other kind so the corporation is mainly targeting a wider range of people, more diet and nature-conscious, giving everything it can to take even a larger chunk of the market.
Now there will be a lot smaller amount of people complaining about doing harm to animals for food because the haters will probably get to the restaurants themselves attracted by the aforementioned brilliant marketing plan.
There are few companies which go along with grounded standards and maintain them. Apple, Amazon and others also prioritize and incorporate values like family, friends and most importantly, integrity to their customers.
The brand also helps. Not only the “Speedee Service System” makes it happen but the golden arches as well. The golden “M” is so deeply embedded into our culture that “McDonald’s” sometimes happens to be one of the first words ever told by a toddler.
In the movie “The Founder“, there is a scene which shows how the McDonald brothers came up with the “Speedee Service System“. It beautifully shows how the original founders were able to “10x” the burger making process.
They took their employees to a tennis court and arranged the whole process like an orchestra. It really seems like a masterpiece. It’s hard to tell if many or at least some restaurants are still using the system but for sure there are some key elements implemented even today.
Getting back to the investment perspectives in this stock, Warren Buffet, during one of Berkshire Hathaway’s shareholder meetings mentioned that one of the things he regrets is not buying McDonald’s stock.
Why? Because it meets all of the Warren’s principles of a great company: a history of a long term and sustainable growth, little to no bad years, simplicity and hefty dividends. Also, the famous investor is known for his questionable diet, burgers and Coca-Cola each day every day. And the burgers are no other than those of McDonald’s.
Since 1965 when the company went public there has been more than 80,000% growth in it’s stock. And that says a lot about a company. From an investor’s perspective, if one had bought McDonald’s shares for, say 100$ once the company went public, those shares today would be worth around 80,000$.
The dividends this corporation pays is also pretty decent compared to other blue-chips who don’t pay at all. 2.27% is the current dividend yield. The stock had been split 12 times already since 1965 and it is probably going to be split again soon enough.
Again, it’s not a tech stock really so the growth of it goes back to the first principles of a great company. Most companies which happen to have rapid growth usually don’t pay dividends but rather keep every penny and reinvest in themselves to have a larger market share in the future.
That’s what Amazon does and it seems to be extremely successful at it. Amazon stock growth is nearly two times higher than McDonald’s in a way shorter period of time. Anyway, those who don’t want to wait for cashing out the large profits, dividends is the way to go.
We have seen a perfect infographic presentation on how one can get dividends each month. It’s really simple: one buys AT&T, Pepsico and McDonald’s corporation and all of them will turn into a dividend paying giant.
All three of these companies pay very high dividends, so if you are comfortable with the tax rates for stock gains, you should definitely consider this awesome tactic. You can calculate your stock gains with us here.
Dividends are great if used and researched properly because taxes in certain states or countries can greatly damage your profits.
And it keeps growing, old dogs are constantly being replaced by millennial innovators, there is so much more space for establishing new locations and enterprising. The minimum amount of people in a city or a town required for McDonald’s to open is about 30,000 so there are many untouched areas where the “Big Mac” (referring to the corporation) can spread.
I myself come from a small town where there is no McDonald’s around and I used to see the eyes of my friends light up when they hear the word “McDonald’s”.
People follow the smell of Mac buns, love the right amount of crisp and salt on the fries and cannot exchange McDonald’s coke to one sold anywhere else. That’s just the way it is and nobody is able to do much about it.
Nor will there be someone in the future who can. It almost becomes like a cultural phenomenon, a form of fine arts, when a brand takes over the world. Of course there are disadvantages and the anti-competitive problems with the small fast food restaurants, but isn’t this one big “M” beautiful?
To conclude, it needs to be said that companies like these should never be forgotten from an investor’s point of view. To overlook a corporation which is stable, has been profitable for more years than most of us are alive and pays their valued investors such decent dividends, is a mistake.
It’s that many of us tend to miss things that we see every day and we often “look for worms deep under ground“. So we encourage every self-respected investor not to forget the basics of a great investment and also have McDonald’s under their radar.