McDonald’s: Bloated From An Unhealthy Diet


  • McDonald’s was a great investment during the last decade and rewarded shareholders with strong dividend growth.
  • Although, when digging under the surface, this was aided significantly by their unhealthy diet of debt-funded share buybacks.
  • These totaled over $38b and thus, as a result, saw their net debt almost triple, which obviously sent their leverage much higher.
  • This cannot continue forever, and I feel the limit is nearby, especially with the era of cheap money ending and rising geopolitical risks.
  • Without these share buybacks, their dividend growth would have been low single-digits, and given their near-record share price, I believe that a sell rating is appropriate.

Fast food items like hot dogs, hamburgers, fries and pizza

wildpixel/iStock via Getty Images


The last decade was very profitable for the shareholders of McDonald’s (NYSE:MCD) who have not only been rewarded by a soaring share price but also, a steady and strong stream of dividend growth that in

McDonald's Shareholder Returns


McDonald's Capital Structure




Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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