MCD vs XOM: Dividend Comparison
Dividend data as of
Mcdonalds Corp (MCD) from Consumer Discretionary and Exxon Mobil Corp (XOM) from Energy offer different dividend profiles for income-focused portfolios. XOM edges ahead on yield at 2.64% versus MCD's 2.17%. For dividend growth, XOM leads with a 5-year CAGR of 11.2% versus MCD's 8.1%. XOM holds the edge in dividend safety with a "Safe" rating. MCD is a Dividend King while XOM is a Dividend Aristocrat.
Verdict
Yield Analysis
XOM yields 0.47% more than MCD. In dollar terms, MCD pays $7.08/share vs XOM's $4.00/share annually.
Dividend Growth
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%.
XOM: Dividend growth is slowing — the 3-year CAGR of 4.3% trails the 5-year rate of 11.2% and the 10-year rate of 6.6%.
Dividend Safety
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.
XOM: The payout ratio of 60% is well within sustainable levels, leaving room for future increases. 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 MCD vs XOM today?
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.
At $148.59 per share, $10,000 buys about 67.3 shares of Exxon Mobil Corp (XOM). Each share pays $4.00 per year in dividends, so the position starts out generating roughly $269 per year — about $22 a month.
XOM is the larger income stream from day one: $53 per year more on the same $10,000 invested.
What could $10,000 of MCD or XOM income look like in 10 years?
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.
Exxon Mobil Corp (XOM) has raised its dividend about 11.2% a year over the past five years. If that pace held, the $264 per year that $10,000 generates today at the current 2.64% yield would reach $760 per year by 2036 — a 7.6% yield on the original cost.
On those trailing rates, XOM pays more in 2036: $760 versus $473 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 XOM's higher yield?
It doesn't, on the trailing numbers. Exxon Mobil Corp (XOM) yields more today (2.64% vs 2.17%) and has also grown its dividend at least as fast (11.2% vs 8.1% a year over five years). Unless MCD accelerates its raises or XOM stumbles, MCD never closes the income gap — XOM wins on both current income and growth.
Can MCD and XOM afford their dividends?
Mcdonalds Corp (MCD) earns $11.72 per share against $7.08 paid out in dividends — 1.7x coverage (a 60% payout ratio).
Exxon Mobil Corp (XOM) earns $6.70 per share against $4.00 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, MCD or XOM?
For income you need right now, Exxon Mobil Corp (XOM) leads: $100,000 invested today pays about $220 a month at the current 2.64% yield, versus $181 a month from Mcdonalds Corp (MCD) at 2.17%.
XOM also leads on dividend growth (11.2% vs 8.1% a year over five years), so the trailing numbers favor it on both fronts.
On consistency: MCD has raised its dividend 50 consecutive years; XOM has raised its dividend 42 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 $587/yr in MCD vs $986/yr in XOM 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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