Need reliable dividend income? Wall Street usually steers investors to the best stocks to buy. Now and then, though, it misses one.
That's what seems to be the case here. Down 20% from its February peak and still dancing with new 52-week lows, this blue chip stock's forward-looking dividend yield now stands at a multiyear high of 2.8%. And that's based on a dividend, by the way, that's now been raised every year for the past 49 years, leaving it one year shy of attaining the title of Dividend King, or stocks that have increased their per-share payment for at least 50 straight years.
There's no end to this streak in sight, either. The underlying company is the fast-food restaurant chain McDonald's (MCD -0.64%).
Image source: Getty Images.
Built to last
There are more than 45,000 Golden Arches peppered across the world, with most of them run by franchisees, even though the parent company technically owns the majority of the buildings and land where these stores operate. That's a big reason for the dividend's persistent growth, too -- one of the company's biggest sources of revenue is the market-based rent it charges its franchisees.
NYSE: MCD
Key Data Points
So why has the stock fallen as much as it has? Mostly because its core customers have been getting squeezed by inflation, pushing them to purchase more lower-margin value-priced items on the menu. Management is concerned that the economic backdrop could worsen before it gets better, too. Investors haven't wanted to stick around to find out.
Buy the dip
Just don't sweat it too much. This isn't a cycle the company hasn't been through dozens of times before. It always bounces back because it's a well-loved brand selling a consumer product that's always in demand. McDonald's just needs to figure out how to best navigate the headwind.
Indeed, pullbacks like the recent one have been great entry points for this stock, which could be crowned a true Dividend King by the end of October.
