Alone in the Dow, McDonald’s shares hit record high

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McDonald’s Corp. has been able to pull off a feat that is eluding the 29 other stocks in the Dow Jones industrial average: The fast-food titan’s shares are trading at an all-time high.

The stock rose $1.18, or 1.6%, to a record $72.92 on Monday after the company said worldwide same-store sales jumped 7% in July from a year earlier.

U.S. sales were up 5.7% for the month, led by the recently introduced McCafe fruit smoothies and frappes, McDonald’s said. The company had good timing with the launch of those chilled drinks, analysts noted: July was excessively hot in many parts of the country.

Like many U.S. blue-chip companies, McDonald’s saw its shares reach record highs in the bull market that ended in 2000, then plunge in the bear market that followed. The stock peaked at $48.38 in November 1999 and fell as low as $12.38 in early 2003.

But McDonald’s shares have bucked the broader market’s woes since 2003, rising every year -- even through the 2008 financial-system crash and recession that followed. The company managed to keep earnings growing through the recession as many consumers sought lower-priced food and drink options, either by necessity or by choice.

This year the company’s stock is up 17%, compared with the Dow index’s 2.6% rise.

And while McDonald’s is scaling new heights, the Dow, at 10,698 on Monday, still is 24% below its record close of 14,164 reached on Oct. 9, 2007.

Besides maintaining earnings growth, McDonald’s has attracted investors by being generous with cash dividends. The firm has doubled its annual dividend payment since 2006, to the current $2.20 a share. That gives the stock a dividend yield of 3% at the current share price, compared with a 2.6% yield for the average Dow stock.

Not surprisingly, the company’s success has put a premium on the shares: The stock trades for 16.2 times analysts’ consensus 2010 earnings estimate of $4.50 a share. By contrast, the average stock in the Standard & Poor’s 500 index trades for about 13.5 times estimated 2010 earnings, according to S&P.

Still, Wall Street always is reluctant to give up on a winner. Of 23 analysts that follow McDonald’s, not one suggests selling at these levels. Sixteen rate the stock a “buy” while seven rate it “hold,” according to Bloomberg News.

-- Tom Petruno