Income · Portfolio Changes

Portfolio Change – McDonald’s Corp.

MCD  While restaurant chain McDonald’s (NYSE: MCD – $94.72) will eventually get its act together, I believe there are now better opportunities for income investors than Mickey D’s. Domestically, same-store sales have slumped even as the economy gets stronger and the prospects for substantial and sustained growth have moderated. Competition is getting fierce and the demographics are changing for the company’s standard menu items. While nothing new, the company is a poster child for low wages and unhealthy food, and as the largest burger chain, McDonald’s gets all the headlines. Although it is not alone in these areas, rarely do you hear of protests in front of Carl’s Jr. or Hardee’s with essentially the same wages and food choices. In the international markets, growth has slowed in virtually all geographies and now the Chinese and Russian markets are being troubled with infected meat suppliers. Russia is also threatening to close some restaurants for sanitary reasons, but it is more likely in retaliation for western sanctions against the country. To top it off, McDonald’s came in dead last out of 21 burger chains in Consumer Reports based on readers’ preference scores. Therefore, I will take the 20.7% gain since MCD entered the income list and substitute the position with a better total return vehicle in a future posting. Note: The shares go ex-dividend on Thursday, August 28th, so those investors with a position in MCD may want to hold onto their shares until after that date to receive the entire $0.81 per share dividend for the previous quarter.

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