Whopper or Big Mac ?

Cheap is chic. The recession has proven that.

But what really hammers home the point is that fast-food restaurants are doing everything they can to lure consumers in with value meals.

It's hard to avoid commercials touting big bargains from the likes of McDonald's (MCD, Fortune 500), Burger King (BKC), Wendy's (WEN) and Yum Brands' (YUM, Fortune 500) Taco Bell, not to mention privately held Subway.

Taco Bell is offering nachos for as cheap as 79 cents. A buck and change can get you a double cheeseburger at McDonald's or a Whopper Jr. (the plural, according to an old Onion bit poking fun at William Safire, is Whoppers Jr.) at Burger King. And if you're more flush with cash, five dollars allows you to wolf down a foot-long hero at Subway.

Talkback: Are you eating at fast food chains more because of the recession?
However, these great caloric bangs for your buck aren't helping all the fast-food restaurants.

Burger King, the nation's No. 2 hamburger chain stunned Wall Street this week when it announced that "significant traffic declines in the month of March" are going to lead to a hit to profit margins this quarter. Shares of Burger King tumbled nearly 18% on the news.

Now it's tempting to conclude that the development means that fast food isn't recession-proof after all. But that would be wrong.

Instead, Burger King's problems appear to be a classic example of why any investor should think twice before making bold bets on an entire industry. In any market environment, you're going to have winners and losers.

Right now, Burger King's woes appear to be McDonald's gains. In an interview on cable network CNBC Friday morning, McDonald's CEO Jim Skinner (SKINNER!) said that Mickey D's was gaining market share in almost all of its markets and that sales were off to a decent start this year despite the recession.

That's worth noting. McDonald's was one of the few major blue chip stocks to actually finish 2008 higher than where it started, but shares have retreated a bit this year.

Some investors may be taking profits in McDonald's because of hopes that the economy may actually be set for a recovery. If that's really the case, shares of so-called defensive companies like McDonald's would probably lag stocks in more economically sensitive sectors like technology, banking and retail.

But while it's probably true that the economy is starting to finally near a bottom, it's hard to imagine the consumer going on lavish shopping sprees anytime soon.

Investors may be celebrating the first-quarter results of big banks. However, Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) each reported increases to their reserves for future credit losses. And as long as unemployment remains on the rise, a lot of people are going to be worried about job security.

That means a lot more dining out will be confined to the likes of fast-food joints as opposed to fancy steakhouses. That clearly bodes well for McDonald's -- even though it may not for Burger King.

Whether or not Burger King can turn things around and start to regain market share from McDonald's remains to be seen. The company, which is known for some bizarrely memorable ad campaigns, may have stumbled recently and turned off consumers.

Burger King recently said it would revise an ad it had for its Texican Whopper in Europe that was thought to be offensive to Mexicans. The ad features a tall American cowboy and a short, Mexican wrestler draped in the country's flag.

Closer to home, Burger King has come under fire from many parents for a truly surreal commercial that features the King dancing to a remake of the racy Sir Mix-A-Lot hit from the 1990s "Baby Got Back."

The ad, which is for a kid's value meal featuring Nickelodeon cartoon character SpongeBob SquarePants, shows scantily clad women dancing around and shaking their behinds while the song declares that the King likes square butts.

The cheeky (sorry) ad might be a tad risque for kids, although Burger King and Nickelodeon parent company Viacom (VIAB, Fortune 500) have claimed the ad is meant for more adults. Alrighty then.

But what this all boils down to is that the shifting fortunes of Burger King and McDonald's should prove beyond the shadow of a doubt that it's often a mistake to make bold bets on industries based on economic trends. Keep that in mind whether you're looking to invest in burgers or banks.CNN.com
I like ( BKC ) for the long term !

McDonald's Delivers Another Year of Strong Results in 2008

McDonald's Delivers Another Year of Strong Results in 2008

McDonald's Corporation (NYSE: MCD) today announced strong operating results for the fourth quarter and the year, driven by global comparable sales growth.

"2008 was a strong year for McDonald's," said Chief Executive Officer Jim Skinner. "Through our strategic focus on menu choice, food quality and value, the average number of customers served per day increased to more than 58 million in 2008. Comparable sales and guest counts were positive across all segments for every quarter, and the Company delivered double-digit growth in operating income for the fourth quarter and the year. These accomplishments validate the strength and resilience of McDonald's Plan to Win."

Full year 2008 highlights included:

-- Global comparable sales increase of 6.9%, including U.S. 4.0%, Europe
8.5%, and Asia/Pacific, Middle East and Africa 9.0%
-- Growth in McDonald's combined operating margin of 320 basis points to
27.4%, after adjusting for the impact of the 2007 Latin America
transaction
-- Operating income increases in the U.S. 8%, Europe 23% (17% in constant
currencies) and Asia/Pacific, Middle East and Africa 33% (28% in
constant currencies)
-- Earnings per share from continuing operations of $3.76, an increase of
16% (14% in constant currencies), after adjusting for the impact of the
2007 Latin America transaction
-- Return of $5.8 billion to shareholders through shares repurchased and
dividends paid, including a 33% increase in the quarterly cash dividend
to $0.50 per share for the fourth quarter - bringing our current annual
dividend rate to $2.00 per share


Fourth quarter highlights included:

-- Global comparable sales increase of 7.2%, fueled by the U.S. 5.0%,
Europe 7.6% and Asia/Pacific, Middle East and Africa 10.0%
-- Consolidated operating income increase of 11% (20% in constant
currencies)
-- Earnings per share of $0.87 compared with earnings per share of $1.06
in fourth quarter 2007, which included a 2007 net benefit of $0.33 per
share related to certain tax items


McDonald's U.S. delivered very strong results for the quarter and year by seizing opportunities in the key growth areas of chicken, breakfast, beverages and convenience. Throughout 2008, the U.S. built brand loyalty by reinforcing the Company's dedication to value, convenience and menu variety with the addition of the Southern Style Chicken biscuit and sandwich, drive-thru enhancements to improve service and ongoing expansion of McCafe specialty coffees.

In Europe, ongoing efforts to strengthen brand relevance generated impressive fourth quarter and full year results. Full year comparable sales were positive in every European market as more customers enjoyed McDonald's combination of seasonal and premium menu selections, compelling value options and inviting restaurants.

Asia/Pacific, Middle East and Africa posted robust comparable sales and operating income growth for the quarter and year. Strong results across the segment were driven by operations excellence and a sharp focus on breakfast, convenience and everyday affordability.

Jim Skinner added, "Our disciplined approach to financial management continues to be an important component of McDonald's success. We remain committed to enhancing shareholder value by investing capital prudently, optimizing our restaurant ownership mix and returning cash to shareholders. To date, we have returned $11.5 billion to shareholders through dividends and share repurchases toward our target of $15 billion to $17 billion for 2007 through 2009. For 2009, we plan to invest $2.1 billion of capital to open about 1,000 new McDonald's restaurants and reinvest in our existing locations."

Jim Skinner concluded, "I am pleased with McDonald's 2008 results, which were achieved through the dedication of our Owner/Operators, suppliers and employees who provide an exceptional restaurant experience for our customers each and every day. McDonald's begins 2009 with six years of momentum, a business model that has delivered even in challenging economic conditions and January sales that remain strong. I am confident that our alignment behind the Plan to Win and our focus on what matters most to customers will continue to generate positive results for our System and shareholders."

Dividend stocks for 2009

Dividend Stocks That Shouldn't Disappoint
By J. BENNETT

Barrons
The companies on our list have a long and steady history of increasing their cash payouts to shareholders.

LAST YEAR, MANY LARGE U.S. companies had to cut or eliminate their dividends. And in 2009, the dividend news is likely to grow worse.
But income-hungry investors who prize dividend payments can still generate reliable returns from the elite among the Standard & Poor's 500 index's dividend-paying stocks.
To come up with a handful of dividend-paying stocks that we think won't let investors down, Barron's Online started with Standard & Poor's S&P 500 Dividend Aristocrats.
The 52 companies on the latest list, which came out in December, have all boosted their dividend payouts to investors for at least 25 consecutive years regardless of market conditions.
The next step was winnowing down the number of stock candidates. First we eliminated companies that aren't expected to generate profit growth in 2009. We also nixed companies with debt-to-capital ratios above 50% as well as companies that were paying out more than half of their annual earnings in dividends.
(A company with too high a dividend-payout ratio has less of an ability to protect its dividend in the event of an earnings downturn.)
We then looked for stocks with growing dividends, and yields above the 1.6% paid by 10-year inflation-protected Treasuries.
Among the stocks left standing were McDonald's (ticker: MCD), Procter & Gamble (PG), Wal-Mart Stores (WMT), Becton Dickinson (BDX) and Aflac (AFL).
These companies have some of the fastest-growing profits and dividends among large-cap stocks.
"In this environment, anyone raising their dividend stands out," says Richard Helm, a manager of the Cohen & Steers Dividend Value Fund. "What better way to show confidence in your business."
Confidence, however, has been waning, and for good reasons.
In 2008, dividend payments by companies in the S&P 500 rose by a mere 2.4%, the worse performance since 2001, when the dividends payout fell 3.3%.
And in 2009, dividends could fall even more than that as the economic recession deepens.
Investment pros suggest avoiding some classic high-yield stocks (see Weekday Trader, "In Dividends We Trust," Sept. 16, 2008).
Falling stock prices will create handsome yields that offer little comfort if the stock price keeps falling or if financial problems force the company to cut its dividend.
Last year, 48 members of the S&P 500 -- including American International Group (AIG), Whole Foods Market (WFMI), Citigroup (C) and the now bankrupt Lehman Bros. -- cut or suspended their dividends, sucking $40.6 billion from investors' pockets, according to Howard Silverblatt, senior index analyst with S&P.
Most of those announcements came from financial firms.
But the pain is spreading beyond financial firms.
To avoid getting blindsided, investors have to "check under the hood," says Judith Saryan, a portfolio manager with Eaton Vance Managed Investments.
Focus on companies with rising profits and enough free cash flow to fund the dividend payment.
Among our recommended five companies, the biggest one was Wal-Mart. While it has a modest yield of 1.8%, it has raised its dividend an average of 18% annually over the last five years.
In a down year for stocks, Wal-Mart shares gained almost 18% in 2008 as Americans flocked to discount stores. Meanwhile, fewer new-store openings and capital-spending cuts have strengthened free cash flow.
The dividend could climb 8% during the next fiscal year, which begins on Feb. 2.
Other company picks are increasing their dividends even faster.
With a yield of 3.4%, fast-food giant McDonald's could increase its payout to investors by almost 27% in 2009 to $2.12 a share.
Six years into a rebound spawned by new foods and less aggressive expansion, the company's popular "Dollar Menu" has lured cash-strapped diners.
Meanwhile, the timing of their last quarterly dividend hike -- a 33% increase on Sept. 25 -- denotes considerable confidence, says Chris Hagedorn, a portfolio manager with the Fifth Third Dividend Growth Fund.
The same can be said for medical-supply company Becton Dickinson, and life insurer Aflac. Both companies raised dividends last quarter.
"If raising the dividend is normally a strong sign of management's faith in the future, then in this environment it's even more so," Hagedorn adds.
Becton's profits are expected to climb an average of 12% annually over the next five years (see Weekday Trader, "Becton Dickinson Is a Safe Bet," July 18, 2008). And during the fiscal year scheduled to end on Sept. 30, 2009, the annual payout could climb 14% to $1.31 a share.
Aflac, meanwhile, has raised its dividend an average of 27% annually over the last five years (see Barron's, "Ducky Doings at Aflac," Feb. 4, 2008).
With a yield of 2.8%, the company's payout still consumes only one-quarter of profits, which are expected to climb 15% annually over the next five years, according to Thomson Reuters.
Other names, however, have had a harder time, recently.
At consumer-products titan Procter & Gamble, earnings estimates have come into doubt. Last month, the company -- which has raised its dividend for 52 consecutive years (see Barron's, "Procter & Gamble Pampers Investors," April 14, 2008) -- warned that organic sales growth fell short during the quarter that ended on Dec. 31.
P&G still expects to earn between $4.28 a share and $4.38 a share during the fiscal year scheduled to end on June 30, a 17.6% to 20% gain.
Wall Street expects the dividend to climb 12%.
Of course, just because a company has a long history of increasing dividends does not mean that payments will keep rising, or survive.
If the recession deepens, then all bets may be off. For now, corporate boards may delay dividend hikes until they have a clearer picture of policies coming out of Washington.
Yet after 25 years or more, old habits die hard.
So investors should still be able to bank on dividends from the few companies that haven't let us down a year into a recession.

My Top August stock picks for 2008

1. ( RT ) RUBY Tuesday 8.28 a share , my target price 15.00 by April 2009.
The expansion was very good for the restaurant and they have struggled because they finished in time for the "credit crunch". However, I think that their balance sheet will turn around in the next few years to make them some great profits.Look for a steady improvement over the next year or so.Ruby Tuesday , Is making new strides and will be making money hand over fist within the next few years. They invested alot of money in there new simple Fresh American Dining & new decor look to there restaurants. 680 domestic restaurants , 54 international .
Brand new Ruby tuesday"s was packed & forget the dark dingy past, the new restaurants are bright , attractive, trendy & well designed decor. Free fresh abundant salad bar w/ a entree. p/e ratio 11.9 , pays a nice dividend ( 3.72 ).Near 52 week low . 2 million insider purchases in Oct. , would u buy that much stock in your own company , if it was ready to tank ? RT has a solid track record of earnings , 4 year low. classic example of an oversold neglected stock, which makes it a superior Buy & hold candidate for the long term . Great fresh , simple food & great new hand crafted beers offered ( Organic choices ) & Jones Soda that is also an option on there new menu and burger sliders are to die for !! W/ all this new changes this will lead to an higher average check and more money to the bottom line , so eat up & enjoy a ruby return within a few years !!!!!!!!!!!!!


2. ( MCD ) McDonald's 63.63 a share , my target price 75.00 by year end.
McDonald's has done a Great job of expanding sales to an international market and has expanded their menu as well. I also expect fast food to be a good investment as the unemployment rate and inflation increase. Once commodity prices drop, this company should earn even more. also they done a get job hedging against food inflation.MCD has great upside potential for next quarter from Olympic earnings.Strong company, pays dividend, and good to own during recession/inflation and during bull markets. Good stock to own as you diversify your portfolio. Another great long term play !! BUY,BUY,BUY !!!!!!