LOW vs MCD: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
MCD yields 0.52% more than LOW. In dollar terms, LOW pays $4.70/share vs MCD's $7.08/share annually.
Dividend Growth
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: The payout ratio of 39% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.6x.
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 LOW vs MCD today?
At $286.71 per share, $10,000 buys about 34.9 shares of Lowes Companies Inc (LOW). Each share pays $4.70 per year in dividends, so the position starts out generating roughly $164 per year — about $14 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.
MCD is the larger income stream from day one: $52 per year more on the same $10,000 invested.
What could $10,000 of LOW or MCD income look like in 10 years?
Lowes Companies Inc (LOW) has raised its dividend about 20.9% a year over the past five years. If that pace held, the $165 per year that $10,000 generates today at the current 1.65% yield would reach $1,102 per year by 2036 — a 11.0% 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, LOW pays more in 2036: $1,102 versus $473 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would LOW's dividend growth overtake MCD's higher yield?
Lowes Companies Inc (LOW) yields less today (1.65% vs 2.17%) but has grown its dividend faster — 20.9% vs 8.1% a year over the past five years. If both trends continued, a $10,000 position in LOW would start out-earning the same position in MCD around 2029 (roughly 3 years from now), paying about $292 per year at the crossover. Before that point, MCD pays more each year; after it, the gap compounds in LOW's favor.
Can LOW and MCD afford their dividends?
Lowes Companies Inc (LOW) earns $12.07 per share against $4.70 paid out in dividends — 2.6x coverage (a 39% payout ratio).
Mcdonalds Corp (MCD) earns $11.72 per share against $7.08 paid out in dividends — 1.7x coverage (a 60% payout ratio).
LOW's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for MCD if earnings weaken.
Which fits an early-retirement income portfolio better, LOW or MCD?
For income you need right now, Mcdonalds Corp (MCD) leads: $100,000 invested today pays about $181 a month at the current 2.17% yield, versus $138 a month from Lowes Companies Inc (LOW) at 1.65%.
With a decade or more before the income is needed, LOW's faster dividend growth (20.9% vs 8.1% a year) matters more than the starting yield — raises compound into the larger paycheck over time.
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 $1,298/yr in LOW 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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