McDonald’s proven defensive nature and pricing power in an uncertain economic environment is the most compelling reason to buy this dominant firm. The company’s 95% franchised model provides a stable, high-margin royalty stream that insulates the corporate bottom line from direct operating cost inflation.
With a solid 2.3% dividend yield and a history of consistent payout growth, it serves as a reliable income generator. Furthermore, the company’s key business strategy is focused on digital ordering, delivery, and drive-through efficiency. This creates a competitive moat that smaller peers cannot replicate. The success of its loyalty program (150 million+ active members) provides proprietary data that allows for hyper-targeted marketing, further locking in customer frequency.
Meanwhile, the stock trades at a reasonable 24.2 times the company’s forward earnings forecast.
MCDONALD’S CORP. (New York symbol MCD) is the world’s largest fast-food chain with over 44,000 restaurants in 119 countries. It serves a wide variety of food but is best known for its hamburgers and french fries.
Thanks to new price-promotions and menu items, McDonald’s revenue in the three months ended September 30, 2025, rose 3.0%, to $7.08 billion from $6.87 billion a year earlier. However, that missed the consensus forecast of $7.09 billion.
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Overall same-store sales improved 3.6%. That’s due to gains at all three of its divisions: up 2.4% at the U.S. stores; up 4.3% at International Operated Markets (Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the U.K.); and up 4.7% at International Developmental Licensed Markets (mainly outlets in China, Japan, the Middle East and all remaining markets).
Due to higher interest costs and taxes, McDonald’s earnings before unusual items fell 0.3%, to $3.22 a share (or a total of $2.31 billion) from $3.23 a share (or $2.32 billion). That missed the consensus estimate of $3.35 a share.
McDonald’s has our Highest sustainability rating
McDonald’s outlook is sound. As well, while tariffs could increase McDonald’s food costs, a slowing economy would also help it draw more customers seeking its lower-priced value meals.
The company continues to open new restaurants—it aims to reach 50,000 outlets by the end of 2027. New locations should increase this year’s earnings to $13.27 a share. The stock trades at a reasonable 24.2 times that estimate.
With the December 2025 payment, McDonald’s raised your quarterly dividend by 5.1%. Investors now receive $1.86 a share instead of $1.77. The new annual rate of $7.44 yields 2.3%.
McDonald’s has raised its annual dividend rate each year since 1976. That payment has grown by an average of 7.6% annually over the past 5 years. The company’s TSI Dividend Sustainability Rating is Highest.
Recommendation in Wall Street Stock Forecaster: McDonald’s Corp. is a buy.
