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Key Points

  • McDonald’s is the fast-food industry leader and leading the industry in growth. 
  • Wendy’s is working on an international expansion that could double its size over the coming years. 
  • Jack in the Box’s newest CEO is working hard to reinvigorate the brand. 
  • 5 stocks we like better than McDonald’s

Fast Food stocks have had a challenging year in 2023, and their shares are under pressure. The issue is not that these companies can’t grow or improve profitability, because they can. The problem is that much of the anticipated growth was already priced into the market, and there are concerns about macroeconomic conditions in the future.

However, for long-term investors, this presents an opportunity. While the share prices of fast food stocks may be under pressure now, the companies and the industry are expected to grow in the coming years, and they are making strategic efforts to leverage their growth. 

These businesses are supported by strong growth initiatives, including international expansions and a focus on digital, positioning them well to benefit when economic conditions change. In the meantime, stocks like McDonald’s NYSE: MCD, Wendy’s NASDAQ: WEN, and Jack In The Box NASDAQ: JACK are high-quality dividend-paying stocks that investors can rely on.

McDonald’s; The Industry Leader 

McDonald’s is the leading player in the fast-food and restaurant stocks industry. It is the largest chain of restaurants worldwide and is experiencing rapid growth. The company achieved an industry-leading 6.7% growth in Q2, with a widening margin. Its margin and earnings growth also outperformed the industry, and the company has a strong growth outlook. 

McDonald’s plans to open approximately 1,500 restaurants this year, which represents about 3.7% of the store count. Based on the company’s historical averages, the growth prospects for 2024 appear promising.

Analysts expect a company-wide growth rate of only 6.7%, implying a comparable store growth of only 3% or so compared to the double-digit gains posted this year. However, the new stores are expected to be located in high-traffic areas and benefit from the latest digital innovations. 

While McDonald’s dividend may not be the highest or the cheapest, it is considered to be safe. The company pays a dividend yield of about 2.1%, with the stock trading at around 25 times earnings. McDonald’s is a Dividend Aristocrat and currently pays only 56% of its earnings as dividends. Earnings growth is expected to exceed the distribution CAGR this year and next, indicating that dividend increases will continue without disrupting cash flow or distribution growth. 

Wendy’s: The #2 Player In Burgers 

Wendy’s is the second-largest burger chain, but it is still only a fraction of the size of McDonald’s. However, this presents an opportunity for growth. Wendy’s is focused on expanding globally to drive its growth. The company achieved a growth rate of only 4.6% in Q2, but it significantly widened its margin and saw a 16% increase in bottom-line earnings.

This is good news for investors looking for dividends, as Wendy’s offers a dividend yield of more than 4.6%, with shares trading at $21.30. The dividend payout ratio may be high relative to earnings due to a recent distribution increase, but the growth outlook compensates for this. The company raised its dividend payment in anticipation of store growth, wider margins, and balance sheet improvements expected in the next year. 

Jack In The Box: It’s A Whole New Business 

Jack in the Box offers a dividend yield of about 2.1%, with shares trading near $83.75. The company’s dividend payment is among the safest in the industry, as it only represents 28% of its earnings. However, investors should not expect significant dividend increases as the company is focused on using its cash to fuel its growth. 

If you are considering investing in McDonald’s, here’s something you should know.

FinanceHubUSA keeps track of Wall Street’s top-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. FinanceHubUSA has identified the five stocks that top analysts are quietly recommending to buy now before the broader market catches on… and McDonald’s is not on the list.

View The Five Stocks Here

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