HD vs MCD: Dividend Yield, Growth & Safety Comparison
Home Depot, Inc. (HD) and Mcdonalds Corp (MCD) are both in the Consumer Discretionary sector, making them natural rivals for dividend investors. Both stocks offer similar yields — HD at 2.35% and MCD at 2.17%. Both stocks carry a "Moderate" dividend safety rating. MCD is a Dividend King with 50 years of consecutive increases.
Key Metrics Comparison
| Metric | HD | MCD |
|---|
| Dividend Yield | 2.35% | 2.17% |
| Annual Dividend | $9.20 | $7.08 |
| 5-Year CAGR | N/A | 8.1% |
| Payout Ratio | 62% | 60% |
| Consecutive Years | N/A | 50 |
| Price | $390.99 | $327.89 |
Yield Comparison
Home Depot, Inc. (HD) currently yields 2.35%, which is solid for the broader market. That's 0.18% more than Mcdonalds Corp (MCD), which yields 2.17%. In dollar terms, HD pays $9.20/share annually versus MCD's $7.08/share.
Dividend Growth
MCD has a 5-year dividend CAGR of 8.1%. Growth data is not available for HD. 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
HD's dividend safety is rated "Moderate." The payout ratio of 62% is moderate. The dividend is currently covered by earnings but leaves less room for growth. 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. Both have similar payout ratios — HD at 62% and MCD at 60%.
Income Comparison
A $10,000 investment in HD generates approximately $235/year in dividend income, compared to $217/year from MCD — a difference of $18/year. At $100,000, that gap widens to $180/year.
Verdict
Frequently Asked Questions
Which has a higher dividend yield, HD or MCD?
Home Depot, Inc. (HD) has a higher dividend yield of 2.35% compared to Mcdonalds Corp (MCD) at 2.17%.
Which is safer for dividend income, HD or MCD?
Home Depot, Inc.'s dividend safety is rated "Moderate" while Mcdonalds Corp is rated "Moderate." The payout ratio of 62% is moderate. The dividend is currently covered by earnings but leaves less room for growth. 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 HD vs MCD generate?
A $10,000 investment in HD generates approximately $235/year in dividends, while the same amount in MCD generates about $217/year.
Is HD or MCD a Dividend Aristocrat?
Mcdonalds Corp is a Dividend King with 50 consecutive years of increases. Home Depot, Inc. does not currently qualify for aristocrat status.
Which has a lower payout ratio, HD or MCD?
Mcdonalds Corp has a lower payout ratio of 60% compared to Home Depot, Inc.'s 62%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
HD vs MCD: which is better for retirement income?
It depends on your priorities. HD for current income. Many retirement investors hold both for diversification.
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