June 16, 2025 a 07:46 am
MCD: Dividend Analysis - McDonald's Corporation
The analysis of McDonald's Corporation's dividend profile reveals a compelling picture for dividend investors. With a storied history of consistent payouts, the company showcases a strong commitment to rewarding shareholders. The key financial metrics highlight moderate growth and a stable yield, making it a strong contender for income-focused portfolios. However, notable financial leverage and payout ratios require careful monitoring. This report delves deeper into these charming nuances to provide a comprehensive investment perspective.
📊 Overview
The following table provides a snapshot of McDonald's Corporation's dividend-related figures, illustrating why it remains an attractive option for dividend investors.
| Sector | Dividend Yield | Current Dividend Per Share | Dividend History | Last Cut or Suspension |
|---|---|---|---|---|
| Consumer Discretionary | 2.23% | 6.78 USD | 50 years | None |
📈 Dividend History
McDonald's has meticulously nurtured its dividend history over decades, reflecting its resilience and shareholder value focus. Such a track record instils confidence in long-term dividend consistency.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 3.54 |
| 2024 | 6.78 |
| 2023 | 6.23 |
| 2022 | 5.66 |
| 2021 | 5.25 |
📉 Dividend Growth
The company's dividend growth rate paints a picture of moderate advancement. Analyzing the growth highlights the sustained commitment towards increasing shareholder returns over time.
| Time | Growth |
|---|---|
| 3 years | 8.90% |
| 5 years | 7.47% |
The average dividend growth is 7.47% over 5 years. This shows moderate but steady dividend growth.
🗣️ Payout Ratio
Payout ratios provide a glimpse into the company's capacity to distribute dividends without compromising financial health. A balanced approach in payout ensures sustainable dividend disbursements.
| Key Figure | Ratio |
|---|---|
| EPS-based | 59.39% |
| FCF-based | 72.31% |
The EPS payout ratio of 59.39% suggests a balanced approach, ensuring enough profits for reinvestment. The FCF ratio, however, indicates a higher reliance on cash flow, warranting attention.
✅ Cashflow & Capital Efficiency
Analyzing cash flow alongside capital efficiency metrics provides insights into resource allocation and operational profitability, both crucial for reliable dividend policies.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.20% | 3.36% | 2.83% |
| Earnings Yield | 3.95% | 3.92% | 3.18% |
| CAPEX to Op Cash Flow | 29.31% | 24.53% | 25.71% |
| Stock Compensation to Revenue | 0.67% | 0.69% | 0.72% |
| FCF/Op Cash Flow Ratio | 70.63% | 75.47% | 74.29% |
The company showcases a solid capital efficiency framework with consistent free cash flow, imperative for sustaining dividend distributions.
⚠️ Balance Sheet & Leverage Analysis
Inspecting leverage and balance sheet metrics elaborates on the firm's capability to handle obligations while maintaining liquidity for dividend commitments.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | -13.68 | -11.28 | -8.11 |
| Debt-to-Assets | 94.14% | 94.56% | 96.56% |
| Debt-to-Capital | 107.88% | 109.73% | 114.06% |
| Net Debt to EBITDA | 3.65 | 3.50 | 4.23 |
| Current Ratio | 1.18 | 1.16 | 1.43 |
| Quick Ratio | 1.18 | 1.16 | 1.41 |
A heavy debt structure requires diligent management to avoid potential liquidity strains which can affect dividends.
✅ Fundamental Strength & Profitability
The robust fundamental returns alongside profitability metrics fortify the firm's dividend-paying capability by ensuring ongoing profitability.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -2.17% | -1.80% | -1.03% |
| Return on Assets | 14.90% | 15.08% | 12.25% |
| Margins: Net | 31.72% | 33.22% | 26.65% |
| Margins: EBIT | 45.72% | 46.61% | 38.96% |
| Margins: EBITDA | 53.81% | 54.37% | 47.03% |
| Margins: Gross | 56.75% | 57.12% | 56.97% |
| R&D/Revenue | 0% | 0% | 0% |
The strong profitability with efficient margins underlines McDonald's competitive edge in maintaining and hopefully elevating dividend payouts.
📉 Price Development
🗣️ Dividend Scoring System
| Criteria | Score | |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 3 | |
| Payout Ratio | 3 | |
| Financial Stability | 2 | |
| Dividend Continuity | 4 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 2 |
Overall Score: 27/40
✅ Rating
McDonald's holds a commendable dividend profile accentuated by a legacy of steady increases and a substantial yield. While leverage should not be ignored, the firm remains a solid income-generating asset, meriting a "buy" recommendation for dividend-focused investors with careful monitoring of its financial leverage positions.