MCD vs ROST: Dividend Yield, Growth & Safety Comparison
Mcdonalds Corp (MCD) and Ross Stores, Inc. (ROST) are both in the Consumer Discretionary sector, making them natural rivals for dividend investors. MCD offers a significantly higher 2.17% yield compared to ROST's 0.82%, a gap of 1.35%. ROST 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 | MCD | ROST |
|---|
| Dividend Yield | 2.17% | 0.82% |
| Annual Dividend | $7.08 | $1.62 |
| 5-Year CAGR | 8.1% | N/A |
| Payout Ratio | 60% | 25% |
| Consecutive Years | 50 | N/A |
| Price | $327.89 | $196.40 |
Yield Comparison
Mcdonalds Corp (MCD) currently yields 2.17%, which is solid for the broader market. That's 1.35% more than Ross Stores, Inc. (ROST), which yields 0.82%. In dollar terms, MCD pays $7.08/share annually versus ROST's $1.62/share.
Dividend Growth
MCD has a 5-year dividend CAGR of 8.1%. Growth data is not available for ROST. 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
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. ROST's dividend safety is rated "Safe." The payout ratio of 25% is well within sustainable levels, leaving room for future increases. ROST's payout ratio of 25% 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 $82/year from ROST — a difference of $135/year. At $100,000, that gap widens to $1350/year.
Verdict
- Best for income: MCD
- Best for safety: ROST
Frequently Asked Questions
Which has a higher dividend yield, MCD or ROST?
Mcdonalds Corp (MCD) has a higher dividend yield of 2.17% compared to Ross Stores, Inc. (ROST) at 0.82%.
Which is safer for dividend income, MCD or ROST?
Mcdonalds Corp's dividend safety is rated "Moderate" while Ross Stores, Inc. is rated "Safe." 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. The payout ratio of 25% is well within sustainable levels, leaving room for future increases.
How much income does $10,000 in MCD vs ROST generate?
A $10,000 investment in MCD generates approximately $217/year in dividends, while the same amount in ROST generates about $82/year.
Is MCD or ROST a Dividend Aristocrat?
Mcdonalds Corp is a Dividend King with 50 consecutive years of increases. Ross Stores, Inc. does not currently qualify for aristocrat status.
Which has a lower payout ratio, MCD or ROST?
Ross Stores, Inc. has a lower payout ratio of 25% compared to Mcdonalds Corp's 60%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
MCD vs ROST: which is better for retirement income?
It depends on your priorities. MCD for current income, ROST for safety. Many retirement investors hold both for diversification.
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