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Although Its Growth Is Hard to Swallow, Investors Should Keep Holding McDonald's

For a time, McDonald's (NYSE: MCD  ) and its investors hoped the company's rejuvenated menu would shake things up and get sales going in the right direction again. Unfortunately, new items like the Chicken McWraps and Mighty Wings couldn't boost sales. It's long been speculated that evolving consumer tastes would take a bite out of fast-food earnings, and that now appears to be the case.

As a result, McDonald's posted weak November sales, and its stock is one of the cheapest of the major publicly traded fast-food purveyors. At the same time, McDonald's remains one of the most valuable brands in the world. The company is still massively profitable and is committed to rewarding shareholders, which is why panic over one month's worth of information is misguided.

How McDonald's can keep growing
McDonald's global comparable sales, which measure only sales at locations open at least one year, rose 0.5% in November, which widely disappointed analysts. Perhaps most surprising was the 2.3% drop in comparable sales in McDonald's Asia/Pacific, Middle East and Africa segment.

This was due primarily to poor results in Japan. The United States, meanwhile posted an 0.8% drop in same-store sales. The company posted relatively flat traffic and notes the ongoing pressures facing its key customer base.

This has affected many fast-food companies, not just McDonald's. Burger King Worldwide (UNKNOWN: BKW.DL  ) saw comparable sales increase just 0.9% in the third quarter. Strength was driven by Burger King's international markets, but the U.S. and Canada posted same-store-sales declines. Going forward, growth will be fueled by opening new locations--Burger King opened 133 new restaurants in the third quarter and plans to expand on that in the future.

Meanwhile, fast-food peer Yum! Brands (NYSE: YUM  ) has had its own share of problems in Asia. Yum! Brands, the operator of KFC, Taco Bell, and Pizza Hut, saw same-restaurant sales fall 11% in China in its most recent quarter. This is due primarily to a public relations nightmare that first began earlier this year, when questions surfaced over the safety of the company's chicken.

This is especially troubling for Yum!, since it derives more than half of its total sales from China alone. And unfortunately, Yum! isn't expecting a quick turnaround. The company is guiding investors to expect full-year earnings per share to decline by a high-single to low-double-digit percentage rate.

McDonald's considers international expansion, particularly in emerging markets, to be a key growth driver going forward. At its recent investor meeting, McDonald's reiterated an initiative called the Plan to Win, which highlights the company's global growth strategy. This calls for aggressive expansion, and McDonald's plans to spend $3 billion next year to open 1,500 to 1,600 new restaurants. This is what compels management to expect 3% to 5% system-wide annual sales growth for the long term.

Shareholder returns are still taken seriously
While McDonald's recent monthly sales figures fluctuated, one thing that remains constant is the company's commitment to returning cash to shareholders. McDonald's distributes billions of dollars to shareholders each year in the form of share buybacks and dividends. In fact, McDonald's returned $1.3 billion to shareholders in the third quarter alone. For all of 2013, the company expects to return between $4 billion and $5 billion to shareholders.

In addition, McDonald's has a dividend program that is tough to match. In September, the company increased the dividend by 5%. This is impressive, since McDonald's has increased its dividend each year since 1976. At recent prices, McDonald's yields 3.3%, a far higher yield than either Burger King or Yum! Brands offers.

The Foolish takeaway
McDonald's sales have stagnated over the past several months. Its expansion efforts in the emerging markets haven't paid off recently, but they are likely to provided you maintain a long-term view. McDonald's is plowing billions into international growth, and considering McDonald's holds one of the most valuable brands in the world, it's difficult to bet against it.

Furthermore, even amid fluctuating business conditions, McDonald's still registers impressive profits. McDonald's remains committed to providing investors with strong share buybacks and a growing dividend year in and year out. As a result, investors should continue to confidently own McDonald's.

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