Why McDonald's (MCD) Surprising Turnaround Is Real -- 3 Factors That Will Propel the Stock in 2016 - TheStreet

This is a comeback story that almost no one expected. Fast food giant McDonald's (MCD) - Get Report is turning things around. If the company's fourth-quarter earnings are any indication, McDonald's is effectively dealing with challenges in the super-competitive fast-food industry. This stock, once considered a hopeless victim of the "fast casual" dining trend, deserves a place once again in your long-term retirement portfolio.

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MCD data by YCharts

Apart from beating analysts' estimates for its top and bottom lines for the fourth quarter, McDonald's also said U.S. same-restaurant sales rose an unexpectedly robust 5.7%.

Let's take a more in-depth look at the three trends that should continue to move this stock higher. 

1. Savvy Management of International Holdings

According to Bloomberg, McDonald's is considering selling off a stake in its Japan unit. This would insulate its global results from losses in Japan and bring in investors with new energy that can help turn around the Japan business. McDonald's Japan has been hurt by a scandal surrounding a China food supplier and by reports of foreign objects found in food, Bloomberg noted.

Instead of Japan, McDonald's appears to be focusing its overseas expansion on other markets that could prove more lucrative over time, such as Russia. The company plans to open more than 60 restaurants in Russia in 2016. (It currently owns 543.) It also plans to procure its food supplies locally to help keep prices down for Russian consumers. (The cost of imported food has risen as the Russian currency has lost value.)

2. Replenishing Brand Value

A major strategic repositioning is keeping the McDonald's brand active, vibrant and fresh. Under new CEO Steve Easterbrook international fast-food company is working on modernizing its brand to align it with contemporary consumer tastes, improving the menu and tweaking operations. 

This recent Telegraph article notes that the company's efforts have included trials of all-day breakfasts and sweet potato fries; newer, more natural-looking packaging; and experiments with hip burger joints that don't have the McDonald's brand. There's a trial restaurant called "The Corner" in Australia that many diners might not realize is run by McDonald's.

3. Enhancing Shareholder Value

McDonald's has been extremely strong when it comes to looking after its shareholders.

This is a company that has delivered 39 consecutive annual dividend increases, with an average dividend increase since 1977 of more than 23%. That's no mean feat.

Its steadily increasing dividend has made McDonald's stock a blue-chip safe haven for retirement investors who treasure income-producing investments.

According to this in-depth look at fourth-quarter figures, McDonald's bottom line does need a bit of improvement. That may not be something to worry about, though, given that most of the operational initiatives implemented by Easterbrook were implemented in the second half of the last year, and that Easterbrook may have more tricks up his sleeve.

McDonald's has a strong track record, a meaty dividend yield of nearly 3%, and compelling valuations.

McDonald's looks like a good move for investors right now. Are you making the right investment moves for your retirement, or are you blowing it by making all-too-common money mistakes? There are crucial steps that you should be taking now, to build wealth over the long haul. To find out whether you'll have enough money in your later years, download our free report: Your Ultimate Retirement Guide.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.