Two buys in the Trading 212 SIPP today: a new position in McDonald's (MCD) and yet more Reddit (RDDT). One is a 47-year dividend growth aristocrat that happens to sell hamburgers. The other is the front page of the internet, a position that's been going well and keeps earning more of my capital. Two very different businesses, one simple approach: buy what works, keep adding, and don't overthink it. May as well, eh?
── McDonald's (MCD) — Not a Burger Company, a Franchise Royalty Machine ──
Let me be honest: I'm not too keen on the food. I don't eat at McDonald's much, and when I do it's usually because I'm in a hurry, not because I'm craving a Big Mac. But here's the thing — you don't need to love the product to love the business. McDonald's is not really a restaurant company. It's one of the largest real estate and franchise operations on earth, dressed up in golden arches. Roughly 95% of McDonald's 40,000+ locations worldwide are franchised. The company owns the land, owns the buildings, and collects rent and royalties from franchisees who run the day-to-day operations. That franchisee — not McDonald's corporate — deals with staffing, inventory, food costs, shift scheduling, and all the headaches of running a restaurant. McDonald's just collects the cheque.
The financial model is beautiful. Franchise royalties and rent are high-margin, recurring, and geographically diversified across 100+ countries. When you're collecting a percentage of every burger sold at 40,000 locations, you benefit from global economic growth without taking operational risk at the store level. The franchisees are entrepreneurs with skin in the game — they work harder and run tighter operations than corporate employees ever would. And McDonald's corporate focuses on what it does best: brand marketing, menu innovation, supply chain optimisation, and real estate strategy.
The dividend record tells the story. McDonald's has increased its dividend for 47 consecutive years — that's through the 1987 crash, the 2000 dot-com bust, the 2008 financial crisis, and the 2020 pandemic. Very few companies on earth can say that. A 47-year dividend growth streak means the business generates consistent, growing free cash flow regardless of the economic environment. People eat McDonald's in good times (convenience) and bad times (affordability). The business is about as recession-resistant as consumer discretionary gets.
The stock is not cheap in the traditional sense — quality rarely is. But it's a compounder: revenue, earnings, and the dividend all growing steadily over time, with a business model that's proven itself across every economic condition imaginable. I'm happy to open a position and let it compound in the SIPP for years. Not too keen on the food, but the shares? The shares are good.
── Reddit (RDDT) — May As Well Keep Adding ──
I opened the Reddit position in the SIPP recently and it's been going well — strong user growth, an advertising business that's finding its stride, and data licensing deals that most social platforms can only dream of. The thesis hasn't changed, so I'm adding a little more. May as well, eh? Reddit is the front page of the internet — 100,000+ active communities, over a billion monthly active users (logged-in and logged-out), and a depth of human knowledge and conversation that Google has been tapping into for years. When you add 'Reddit' to a Google search, you're not looking for a corporate FAQ — you're looking for real people sharing real experiences. That's Reddit's value.
The advertising business is the main revenue engine and it's growing well. Reddit's ad platform is improving, and the targeting based on community interests rather than personal data is genuinely differentiated. A user in r/coffee is a better target for a coffee brand than someone whose browsing history suggests they once bought a cafetière. Community-based intent is powerful, and Reddit owns more of it than anyone.
The data licensing opportunity is the wildcard. AI companies need vast amounts of human-generated text to train large language models, and Reddit's corpus — billions of real conversations, questions, answers, arguments, and recommendations across every topic imaginable — is uniquely valuable. Google and others have already signed licensing deals, and more are likely. This revenue stream is new, high-margin, and growing. It's the kind of optionality you get for free when you own a platform built on two decades of human conversation.
The position is still modest in the portfolio but growing. Reddit is not without risk — advertising is cyclical, user growth can stall, and community moderation at scale is genuinely hard. But the platform is unique, the engagement is sticky, and the business is improving. May as well keep adding. That's how positions go from small to meaningful.
── Two Completely Different Businesses, Same Simple Idea ──
McDonald's — the 47-year dividend growth aristocrat, a franchise royalty machine that's survived every economic crisis since the 1970s. Reddit — the 18-year-old internet platform that's just now figuring out how to monetise its community. Could not be more different. But the underlying investment logic is the same: buy businesses that are growing, profitable (or on the path), and possess genuine competitive advantages that competitors can't easily replicate. McDonald's has the real estate and the brand. Reddit has the community and the data. Both earn their place in the SIPP.
As always, nothing on this site is financial advice. I'm a 66-year-old UK investor sharing what I do with my own money in the Trading 212 SIPP. McDonald's and Reddit shares can go down as well as up. Do your own research.