JNJ vs MCD: Dividend Yield, Growth & Safety Comparison
Johnson & Johnson (JNJ) from Health Care and Mcdonalds Corp (MCD) from Consumer Discretionary offer different dividend profiles for income-focused portfolios. Both stocks offer similar yields — JNJ at 2.16% and MCD at 2.17%. For dividend growth, MCD leads with a 5-year CAGR of 8.1% versus JNJ's 5.2%. JNJ holds the edge in dividend safety with a "Safe" rating. Both are classified as Dividend Kings.
Key Metrics Comparison
| Metric | JNJ | MCD |
|---|
| Dividend Yield | 2.16% | 2.17% |
| Annual Dividend | $5.14 | $7.08 |
| 5-Year CAGR | 5.2% | 8.1% |
| Payout Ratio | 47% | 60% |
| Consecutive Years | 63 | 50 |
| Price | $243.53 | $327.89 |
Yield Comparison
Mcdonalds Corp (MCD) currently yields 2.17%, which is solid for the broader market. Johnson & Johnson (JNJ) yields a nearly identical 2.16%. In dollar terms, MCD pays $7.08/share annually versus JNJ's $5.14/share.
Dividend Growth
Over the past five years, MCD has grown its dividend at a 8.1% CAGR compared to JNJ's 5.2%. JNJ: Dividend growth is slowing — the 3-year CAGR of 4.6% trails the 5-year rate of 5.2% and the 10-year rate of 5.6%. 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
JNJ's dividend safety is rated "Safe." The payout ratio of 47% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.1x. 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. JNJ's payout ratio of 47% 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 $216/year from JNJ — a difference of $1/year. At $100,000, that gap widens to $10/year.
Verdict
- Best for growth: MCD
- Best for safety: JNJ
Frequently Asked Questions
Which has a higher dividend yield, JNJ or MCD?
Mcdonalds Corp (MCD) has a higher dividend yield of 2.17% compared to Johnson & Johnson (JNJ) at 2.16%.
Is JNJ or MCD a better dividend growth stock?
Mcdonalds Corp has the stronger dividend growth with a 5-year CAGR of 8.1%, compared to Johnson & Johnson's 5.2%.
Which is safer for dividend income, JNJ or MCD?
Johnson & Johnson's dividend safety is rated "Safe" while Mcdonalds Corp is rated "Moderate." The payout ratio of 47% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.1x. 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 JNJ vs MCD generate?
A $10,000 investment in JNJ generates approximately $216/year in dividends, while the same amount in MCD generates about $217/year.
Is JNJ or MCD a Dividend Aristocrat?
Johnson & Johnson is a Dividend King (63 years) and Mcdonalds Corp is a Dividend King (50 years).
Which has a lower payout ratio, JNJ or MCD?
Johnson & Johnson has a lower payout ratio of 47% compared to Mcdonalds Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
JNJ vs MCD: which is better for retirement income?
It depends on your priorities. MCD for dividend growth, JNJ for safety. Many retirement investors hold both for diversification.
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