McDonald's: A Tasty Dividend And Bullish Chart Action

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IBD advises looking for income stocks that offer not just a tasty dividend, but also the potential for price appreciation. That means being aware of chart action, such as when a stock is clearing an area of price consolidation.

McDonald's ( MCD ) is a good example of a dividend payer showing bullish action. The fast food giant provides an annualized yield of about 3%, and it's made a breakout from a base.

You could view McDonald's action since January 2012 as a long saucer-shaped consolidation. The stock tacked on a handle to this chart pattern in February this year, resulting in a buy point at 96.42. McDonald's has cleared the buy point, but it's trading less than 5% past that level, so it's in buying range.


The Oak Brook, Ill., company has shown steadiness in its profit results, another quality that you want to see in dividend stocks. It has achieved three-year and five-year EPS Stability Factors of 3. That's near the best-possible grade of 0 and far from the worst-possible level of 99.

Earlier this month, McDonald's reported February sales that beat forecasts. Same-store sales fell 1.5% for the month, better than the 1.6% drop that analysts had expected.

Adjusting for February 2012's extra leap-year day, comparable sales rose 1.7%.

Analysts at Credit Suisse cited the February news as evidence that McDonald's is taking market share from competitors.

In a research note, they said rivals cited gasoline prices, the higher payroll tax and other macroeconomic factors in explaining slowdowns in February.

But McDonald's "did not see any meaningful trend within that to suggest it was feeling the same macro pressures."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: MCD

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