KO vs MCD: Dividend Comparison
Dividend data as of
Coca Cola Co (KO) from Consumer Staples and Mcdonalds Corp (MCD) from Consumer Discretionary offer different dividend profiles for income-focused portfolios. KO edges ahead on yield at 2.58% versus MCD's 2.17%. For dividend growth, MCD leads with a 5-year CAGR of 8.1% versus KO's 5.0%. Both stocks carry a "Moderate" dividend safety rating. KO is a Dividend Contender while MCD is a Dividend King.
Verdict
Yield Analysis
KO yields 0.41% more than MCD. In dollar terms, KO pays $2.04/share vs MCD's $7.08/share annually.
Dividend Growth
KO: Dividend growth has been steady, with a 3-year CAGR of 5.3% and a 5-year CAGR of 5.0% (10-year: 4.3%).
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
KO: The payout ratio of 67% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.5x.
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 KO vs MCD today?
At $78.74 per share, $10,000 buys about 127.0 shares of Coca Cola Co (KO). Each share pays $2.04 per year in dividends, so the position starts out generating roughly $259 per year — about $22 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.
KO is the larger income stream from day one: $43 per year more on the same $10,000 invested.
What could $10,000 of KO or MCD income look like in 10 years?
Coca Cola Co (KO) has raised its dividend about 5.0% a year over the past five years. If that pace held, the $258 per year that $10,000 generates today at the current 2.58% yield would reach $419 per year by 2036 — a 4.2% yield on the original cost.
Mcdonalds Corp (MCD) has raised its dividend about 8.1% a year over the past five years. If that pace held, the $217 per year that $10,000 generates today at the current 2.17% yield would reach $473 per year by 2036 — a 4.7% yield on the original cost.
On those trailing rates, MCD pays more in 2036: $473 versus $419 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would MCD's dividend growth overtake KO's higher yield?
Mcdonalds Corp (MCD) yields less today (2.17% vs 2.58%) but has grown its dividend faster — 8.1% vs 5.0% a year over the past five years. If both trends continued, a $10,000 position in MCD would start out-earning the same position in KO around 2032 (roughly 6 years from now), paying about $347 per year at the crossover. Before that point, KO pays more each year; after it, the gap compounds in MCD's favor.
Can KO and MCD afford their dividends?
Coca Cola Co (KO) earns $3.04 per share against $2.04 paid out in dividends — 1.5x coverage (a 67% payout ratio).
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, KO or MCD?
For income you need right now, Coca Cola Co (KO) leads: $100,000 invested today pays about $215 a month at the current 2.58% yield, versus $181 a month from Mcdonalds Corp (MCD) at 2.17%.
With a decade or more before the income is needed, MCD's faster dividend growth (8.1% vs 5.0% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
On consistency: KO has raised its dividend 23 consecutive years; 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 $541/yr in KO 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. A projection, not a prediction — no price appreciation modeled.
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