McDonald's Corporation

New York Stock Exchange
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Slightly Bullish +25

Should You Buy This Donald Trump Dividend Stock Before Earnings?

📈 McDonald's (NYSE:MCD) is among President Trump's top dividend stocks with about 50 years of consecutive dividend increases.

📅 The company is scheduled to announce earnings on August 4, 2026.

📉 Shares are down approximately 10% year-to-date while the broader market has climbed roughly 18%.

💰 About 95% of McDonald's restaurants are run by franchisees, allowing the company to collect rent and royalties with an 83% operating margin on those locations.

📊 Revenue increased 9.4% year over year, with comparable sales growing 3.8% globally and 3.9% in the US.

🍔 Beef prices rose 15.9% year over year through May and are expected to climb another 9.4% before 2026 ends.

💊 Roughly 15% of Americans are expected to be on GLP-1 drugs by 2035, posing a potential industry-wide spending hit estimated under 10%.

🤖 Self-serve kiosks are standard in Thailand and Malaysia but rare in North America, offering potential margin upside if rolled out.

📉 MCD trades around 20 to 21 times forward earnings, well below its 8-to-10-year average of the mid-20s.

⚠️ At least one Wall Street analyst noted that last year's Minecraft promotion set a tough comparison baseline for current results.

Bullish Signals
  • McDonald's has about 50 years of consecutive dividend increases, establishing it as a top dividend stock with a solid payout history.
  • The company's franchise model generates an 83% operating margin on franchised locations compared to roughly 12% for company-run restaurants.
  • Revenue grew 9.4% year over year, driven by comparable sales growth of 3.8% globally and 3.9% in the US.
  • Systemwide sales were up 11% on a reported basis, indicating strong overall performance across all store types.
  • The stock is trading at 20 to 21 times forward earnings, significantly below its historical average of the mid-20s, suggesting potential undervaluation.
  • McDonald's has room to increase its dividend payout ratio, which sits in the mid-to-high 50s of adjusted earnings and around two-thirds of free cash flow.
Risk Factors
  • Beef prices have risen 15.9% year over year through May and are expected to climb another 9.4% before 2026 ends, squeezing profitability at company-operated restaurants.
  • Management has admitted that profitability at company-operated locations isn't where it needs to be due to rising input costs.
  • Rising energy costs are squeezing lower-income households, potentially reducing demand for the value-menu strategy which is now viewed as triage rather than growth.
  • GLP-1 drugs are expected to impact roughly 15% of Americans by 2035, creating a real variable that could reduce restaurant spending industry-wide.
  • Early signals on the FIFA World Cup tie-in are mixed, and revenue could come in soft even if EPS beats estimates due to this promotion's performance.
  • The stock is down about 10% so far this year while the broader market climbed roughly 18%, indicating a disconnect between company performance and share price.
Full Analysis
McDonald's (NYSE:MCD) is highlighted as a top dividend stock within President Trump's portfolio, boasting approximately 50 years of consecutive dividend increases. The company is scheduled to report earnings on August 4, with shares currently down about 10% year-to-date despite beating earnings estimates. This underperformance has led to a valuation reversion, trading at 20-21 times forward earnings compared to an 8-to-10-year average of the mid-20s. McDonald's business model relies heavily on its franchisees, with about 95% of restaurants operated by them. This structure allows the company to collect rent and royalties while franchisees manage labor and food costs, resulting in an 83% operating margin for franchised locations versus roughly 12% for company-run sites. Revenue grew 9.4% year over year, driven by comparable sales increases globally and in the US, supported by value menus and a Netflix crossover promotion. The article identifies specific headwinds including rising beef prices expected to climb another 9.4% before the end of 2026, which is squeezing profitability at company-operated locations. Additionally, the potential impact of GLP-1 drugs on consumer spending remains a variable, though the company is adapting with higher-protein options. Management is reconsidering its footprint of company-owned versus franchised locations to mitigate these cost pressures. Future growth opportunities include the potential rollout of self-serve kiosks in North America, modeled after successful implementations in Asia, which could drive margin upside. While Q1 and Q4 are historically weaker quarters, analysts note that revenue might be soft due to mixed signals from recent promotions like FIFA World Cup tie-ins. Ultimately, the investment case rests on a solid dividend history and a resilient franchise model, though valuation debates persist regarding whether MCD deserves its current multiple.