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New CEO, Sharper Focus At Dividend Leader McDonald's

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F our restaurant names popped up Thursday in IBD's Dividend Leaders screen. While selling in recent months has hitBrinker International ( EAT ),Dunkin' Brands ( DNKN ) andYum Brands ( YUM ) hard, Dow Jones industrials componentMcDonald's ( MCD ) is only 3% off its high.

It currently pays a quarterly dividend of 85 cents a share. The long-term dividend growth rate is 9%; the stock offers an annualized yield of 3.5%.

CEO Steve Easterbrook took the helm in March. Two months later, he announced a turnaround plan, calling recent performance "poor" and saying, "The numbers don't lie."

Concerns about future growth prospects at McDonald's have been plaguing the stock for some time now, amid daunting competition from the emergence of fast-casual chains likeChipotle ( CMG ) andPanera Bread (PNRA) as well as burger chainsShake Shack (SHAK), Five Guys and Smashburger.

Give McDonald's credit, though. It continues to innovate. The company introduced digital self-serve kiosks where people can customize their burgers. The kiosks are part of McDonald's "Create Your Taste" platform.

One issue, though, is that the kiosks are located inside restaurants, while McDonald's reportedly derives as much as 70% of its sales from drive-through.

On a broader scale, the fast food giant is considering 24-hour breakfast options and more streamlined menus. It recently launched sirloin burgers and artisan grilled chicken sandwiches.

Separately, Dunkin' Brands has been aggressively expanding, but shares fell hard Thursday after the company announced plans to close 100 stores in 2015-16. It also offered sluggish guidance.

Dunkin' Brands, which yields just over 2%, competes in the breakfast space. Yum Brands' Taco Bell unit has also emerged as a formidable breakfast competitor.

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


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

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