LOW vs MCD: Dividend Yield, Growth & Safety Comparison
Lowes Companies Inc (LOW) and Mcdonalds Corp (MCD) are both in the Consumer Discretionary sector, making them natural rivals for dividend investors. MCD edges ahead on yield at 2.17% versus LOW's 1.65%. For dividend growth, LOW leads with a 5-year CAGR of 20.9% versus MCD's 8.1%. LOW holds the edge in dividend safety with a "Safe" rating. MCD is a Dividend King with 50 years of consecutive increases.
Key Metrics Comparison
| Metric | LOW | MCD |
|---|
| Dividend Yield | 1.65% | 2.17% |
| Annual Dividend | $4.70 | $7.08 |
| 5-Year CAGR | 20.9% | 8.1% |
| Payout Ratio | 39% | 60% |
| Consecutive Years | 0 | 50 |
| Price | $286.71 | $327.89 |
Yield Comparison
Mcdonalds Corp (MCD) currently yields 2.17%, which is solid for the broader market. That's 0.52% more than Lowes Companies Inc (LOW), which yields 1.65%. In dollar terms, MCD pays $7.08/share annually versus LOW's $4.70/share.
Dividend Growth
Over the past five years, LOW has grown its dividend at a 20.9% CAGR compared to MCD's 8.1%. LOW: Dividend growth is slowing — the 3-year CAGR of 20.3% trails the 5-year rate of 20.9% and the 10-year rate of 19.0%. 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
LOW's dividend safety is rated "Safe." The payout ratio of 39% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.6x. 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. LOW's payout ratio of 39% 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 $165/year from LOW — a difference of $52/year. At $100,000, that gap widens to $520/year.
Verdict
- Best for income: MCD
- Best for growth: LOW
- Best for safety: LOW
Frequently Asked Questions
Which has a higher dividend yield, LOW or MCD?
Mcdonalds Corp (MCD) has a higher dividend yield of 2.17% compared to Lowes Companies Inc (LOW) at 1.65%.
Is LOW or MCD a better dividend growth stock?
Lowes Companies Inc has the stronger dividend growth with a 5-year CAGR of 20.9%, compared to Mcdonalds Corp's 8.1%.
Which is safer for dividend income, LOW or MCD?
Lowes Companies Inc's dividend safety is rated "Safe" while Mcdonalds Corp is rated "Moderate." The payout ratio of 39% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.6x. 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 LOW vs MCD generate?
A $10,000 investment in LOW generates approximately $165/year in dividends, while the same amount in MCD generates about $217/year.
Is LOW or MCD a Dividend Aristocrat?
Mcdonalds Corp is a Dividend King with 50 consecutive years of increases. Lowes Companies Inc does not currently qualify for aristocrat status.
Which has a lower payout ratio, LOW or MCD?
Lowes Companies Inc has a lower payout ratio of 39% compared to Mcdonalds Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
LOW vs MCD: which is better for retirement income?
It depends on your priorities. MCD for current income, LOW for dividend growth, LOW for safety. Many retirement investors hold both for diversification.
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