This Blue Chip Dividend Stock Is Now Oversold
When a stock goes into oversold territory, it can be a great buying opportunity for long-term investors. If a business possesses solid fundamentals, then you shouldn’t hesitate to load up on the quality stock, especially if it also pays a dividend.
A common way to find an oversold stock is by looking at its Relative Strength Index, or RSI. When the RSI falls below 30, that tells investors that a stock is oversold and that there has been a lot of selling recently. The RSI looks at the past 14 trading days.
One top dividend stock which recently fell into oversold territory is McDonald’s (NYSE:MCD). As of the end of last week, its RSI was around just 23. Amid sluggish sales growth and concerns about elevated prices turning consumers away and the impact of weight loss drugs impacting demand, investors have become concerned about the company’s future.
McDonald’s stock currently yields 2.5% and the good news is that its fundamentals are still strong. In the trailing 12 months, the company has reported net income totaling $8.2 billion on revenue of $25.7 billion – for a profit margin of around 32%.
With a modest payout ratio of 61%, there’s still plenty of room for this dividend growth stock to continue raising its payments for years to come. The fast food giant has raised its payout for 48 consecutive years already.
Even if McDonald’s doesn’t achieve strong revenue growth in the near future, its brand remains iconic and the business is likely to continue to do well as it continually adapts and updates its menu to meet consumer needs and preferences. Although the short term may look concerning, I wouldn’t hesitant to invest in McDonald’s stock for the long haul.
