HD vs MCD: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
HD yields 0.18% more than MCD. In dollar terms, HD pays $9.20/share vs MCD's $7.08/share annually.
Dividend Growth
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: The payout ratio of 62% is moderate. The dividend is currently covered by earnings but leaves less room for growth.
MCD: 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.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in HD vs MCD today?
At $390.99 per share, $10,000 buys about 25.6 shares of Home Depot, Inc. (HD). Each share pays $9.20 per year in dividends, so the position starts out generating roughly $235 per year — about $20 a month.
At $327.89 per share, $10,000 buys about 30.5 shares of Mcdonalds Corp (MCD). Each share pays $7.08 per year in dividends, so the position starts out generating roughly $216 per year — about $18 a month.
HD is the larger income stream from day one: $19 per year more on the same $10,000 invested.
Why is there no dividend growth comparison for HD?
REWD's dividend database has no five-year growth rate for Home Depot, Inc. (HD) — most often because the dividend history is too short to compute one, which is common for companies that began paying dividends only in the past few years.
What the data does show for HD: a 2.35% current yield and a moderate 62% payout ratio. Until a multi-year raise history exists, treat any growth assumption for HD as a guess rather than a trend.
Mcdonalds Corp (MCD) is the one with a measurable track record here — dividend raises of about 8.1% a year over the past five years. If a proven raise history matters to you, MCD wins that dimension by default until HD builds one.
Can HD and MCD afford their dividends?
Home Depot, Inc. (HD) pays out about 62% of its earnings as dividends, which implies roughly 1.6x earnings coverage.
Mcdonalds Corp (MCD) earns $11.72 per share against $7.08 paid out in dividends — 1.7x coverage (a 60% payout ratio).
Coverage is similar for both, so neither dividend looks meaningfully more stretched than the other on current earnings.
Which fits an early-retirement income portfolio better, HD or MCD?
For income you need right now, Home Depot, Inc. (HD) leads: $100,000 invested today pays about $196 a month at the current 2.35% yield, versus $181 a month from Mcdonalds Corp (MCD) at 2.17%.
On consistency: MCD has raised its dividend 50 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $297/yr in HD vs $587/yr in MCD by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR (0% where growth history is unavailable). A projection, not a prediction — no price appreciation modeled.
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