AFL vs MCD: Dividend Yield, Growth & Safety Comparison
Aflac Inc (AFL) from Financials and Mcdonalds Corp (MCD) from Consumer Discretionary offer different dividend profiles for income-focused portfolios. Both stocks offer similar yields — AFL at 2.11% and MCD at 2.17%. For dividend growth, AFL leads with a 5-year CAGR of 15.1% versus MCD's 8.1%. AFL holds the edge in dividend safety with a "Safe" rating. AFL is a Dividend Aristocrat while MCD is a Dividend King.
Key Metrics Comparison
| Metric | AFL | MCD |
|---|
| Dividend Yield | 2.11% | 2.17% |
| Annual Dividend | $2.44 | $7.08 |
| 5-Year CAGR | 15.1% | 8.1% |
| Payout Ratio | 34% | 60% |
| Consecutive Years | 41 | 50 |
| Price | $115.04 | $327.89 |
Yield Comparison
Mcdonalds Corp (MCD) currently yields 2.17%, which is solid for the broader market. That's 0.06% more than Aflac Inc (AFL), which yields 2.11%. In dollar terms, MCD pays $7.08/share annually versus AFL's $2.44/share.
Dividend Growth
Over the past five years, AFL has grown its dividend at a 15.1% CAGR compared to MCD's 8.1%. AFL: Dividend growth is accelerating — the 3-year CAGR of 35.7% exceeds the 5-year rate of 15.1% and the 10-year rate of 15.7%. MCD: Dividend growth is slowing — the 3-year CAGR of 7.3% trails the 5-year rate of 8.1% and the 10-year rate of 7.9%.
Dividend Safety
AFL's dividend safety is rated "Safe." The payout ratio of 34% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.8x. MCD's dividend safety is rated "Moderate." The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. AFL's payout ratio of 34% is more conservative than MCD's 60%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in MCD generates approximately $217/year in dividend income, compared to $211/year from AFL — a difference of $6/year. At $100,000, that gap widens to $60/year.
Verdict
- Best for income: MCD
- Best for growth: AFL
- Best for safety: AFL
Frequently Asked Questions
Which has a higher dividend yield, AFL or MCD?
Mcdonalds Corp (MCD) has a higher dividend yield of 2.17% compared to Aflac Inc (AFL) at 2.11%.
Is AFL or MCD a better dividend growth stock?
Aflac Inc has the stronger dividend growth with a 5-year CAGR of 15.1%, compared to Mcdonalds Corp's 8.1%.
Which is safer for dividend income, AFL or MCD?
Aflac Inc's dividend safety is rated "Safe" while Mcdonalds Corp is rated "Moderate." The payout ratio of 34% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.8x. The payout ratio of 60% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x.
How much income does $10,000 in AFL vs MCD generate?
A $10,000 investment in AFL generates approximately $211/year in dividends, while the same amount in MCD generates about $217/year.
Is AFL or MCD a Dividend Aristocrat?
Aflac Inc is a Dividend Aristocrat (41 years) and Mcdonalds Corp is a Dividend King (50 years).
Which has a lower payout ratio, AFL or MCD?
Aflac Inc has a lower payout ratio of 34% compared to Mcdonalds Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
AFL vs MCD: which is better for retirement income?
It depends on your priorities. MCD for current income, AFL for dividend growth, AFL for safety. Many retirement investors hold both for diversification.
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