Published on October 18th, 2019 by Josh Arnold
It would not be an exaggeration to say that in just about every country in the world today, McDonald’s (MCD) is a household name. The company that is famous for its Happy Meals and Big Mac has found a way to grow around the world, in part by tailoring its offerings to its local customers.
McDonald’s is undoubtedly a growth success story over its company history, and in turn shareholders have been rewarded with rising dividends since 1976. For the past 43 years, McDonald’s has managed to grow its dividend payment to shareholders, despite varying economic conditions around the world.
Because of its impressive dividend history, we view McDonald’s as a blue chip stock, which we consider to be the safest dividend stocks in the market today due to their consistent growth and durable competitive advantages.
Because of its long history of steady dividend increases, we view McDonald’s as a blue chip stock.
You can download the complete list of all 271 blue chip stocks below:
You can view a preview of our blue chip stocks spreadsheet below:
Ticker Name Price Dividend Yield Market Cap ($M) P/E Ratio Payout Ratio
MMM
3M Co.
163.54
3.4
94,081.1
19.4
66.3
AOS
A. O. Smith Corp.
50.02
1.7
6,920.3
19.9
33.5
ABT
Abbott Laboratories
82.38
1.6
145,598.4
ABBV
AbbVie, Inc.
75.14
5.5
111,093.0
27.6
153.0
AFL
Aflac, Inc.
52.65
2.0
38,981.2
12.8
25.7
APD
Air Products & Chemicals, Inc.
214.37
2.1
47,237.5
27.6
58.2
ADM
Archer-Daniels-Midland Co.
39.85
3.4
22,195.4
17.0
58.5
T
AT&T, Inc.
37.81
5.4
276,277.7
15.8
85.1
ADP
Automatic Data Processing, Inc.
163.83
1.9
71,052.9
31.0
58.0
BDX
Becton, Dickinson & Co.
256.80
1.2
69,324.2
88.2
105.2
BF.B
Brown-Forman Corp.
63.72
1.0
30,428.8
37.1
38.2
CAH
Cardinal Health, Inc.
51.21
3.7
14,974.0
11.3
42.2
CAT
Caterpillar, Inc.
132.07
2.6
74,301.1
12.2
31.7
CB
Chubb Ltd.
153.02
1.9
69,738.7
18.6
35.8
CVX
Chevron Corp.
115.35
4.0
218,982.7
14.8
59.4
CINF
Cincinnati Financial Corp.
115.12
1.9
18,803.2
15.3
29.1
CTAS
Cintas Corp.
268.33
0.0
27,772.2
30.8
0.0
CLX
The Clorox Co.
149.40
2.6
18,748.8
23.3
61.3
KO
The Coca-Cola Co.
53.79
2.9
230,007.7
32.7
96.1
CL
Colgate-Palmolive Co.
68.08
2.5
58,413.0
25.9
64.2
ED
Consolidated Edison, Inc.
91.30
3.2
30,324.7
21.6
68.8
DOV
Dover Corp.
101.38
1.9
14,744.5
24.5
46.5
ECL
Ecolab, Inc.
194.04
0.9
55,835.4
37.4
34.5
EMR
Emerson Electric Co.
68.05
2.9
41,857.6
19.1
55.0
XOM
Exxon Mobil Corp.
68.14
4.9
288,307.8
16.4
80.2
FRT
Federal Realty Investment Trust
137.75
3.0
10,411.3
41.7
123.6
BEN
Franklin Resources, Inc.
27.14
3.7
13,669.5
10.0
37.3
GD
General Dynamics Corp.
176.76
2.2
51,056.1
15.5
34.3
GPC
Genuine Parts Co.
98.93
3.0
14,451.5
18.3
54.8
HRL
Hormel Foods Corp.
40.86
2.0
21,818.0
22.2
44.3
ITW
Illinois Tool Works, Inc.
156.96
2.5
50,773.1
21.0
53.4
JNJ
Johnson & Johnson
136.17
2.7
359,375.8
KMB
Kimberly-Clark Corp.
135.62
3.0
46,680.4
26.0
77.8
LEG
Leggett & Platt, Inc.
43.04
3.6
5,658.5
19.9
71.2
LIN
Linde Plc
196.64
1.7
106,301.8
19.6
33.9
LOW
Lowe's Cos., Inc.
112.60
1.8
86,904.6
35.1
62.1
MKC
McCormick & Co., Inc.
162.10
1.4
21,545.0
30.5
41.9
MCD
McDonald's Corp.
206.85
2.2
157,091.0
26.9
58.4
MDT
Medtronic Plc
108.51
1.9
145,584.6
32.9
61.9
NUE
Nucor Corp.
51.75
3.1
15,688.4
7.3
22.3
PBCT
People's United Financial, Inc.
15.78
4.5
6,292.3
12.0
53.6
PNR
Pentair Plc
38.46
1.8
6,463.2
18.0
33.2
PEP
PepsiCo, Inc.
136.96
2.7
190,981.1
15.5
42.7
PPG
PPG Industries, Inc.
121.24
1.6
28,648.2
23.8
38.3
PG
Procter & Gamble Co.
116.63
2.5
291,881.7
79.9
198.5
ROP
Roper Technologies, Inc.
340.75
0.5
35,438.7
31.4
16.6
SPGI
S&P Global, Inc.
253.00
0.8
62,313.9
31.9
27.0
SHW
The Sherwin-Williams Co.
560.54
0.7
51,713.2
44.2
31.4
SWK
Stanley Black & Decker, Inc.
148.77
1.8
22,574.8
31.2
55.3
SYY
Sysco Corp.
79.21
1.9
40,556.1
24.4
47.1
TROW
T. Rowe Price Group, Inc.
110.25
2.6
25,971.0
13.7
36.2
TGT
Target Corp.
113.23
2.3
57,852.5
18.6
42.3
UTX
United Technologies Corp.
138.17
2.1
119,229.5
22.3
46.9
VFC
VF Corp.
91.54
2.2
36,449.1
31.6
68.6
GWW
W.W. Grainger, Inc.
310.74
1.8
16,957.4
21.1
37.4
WMT
Walmart, Inc.
119.84
1.8
340,858.5
26.9
47.1
WBA
Walgreens Boots Alliance, Inc.
55.94
3.1
50,521.8
10.9
34.4
ABM
ABM Industries, Inc.
37.00
1.9
2,457.4
27.6
53.3
AWR
American States Water Co.
94.68
1.2
3,487.3
45.8
53.2
CBSH
Commerce Bancshares, Inc. (Missouri)
62.30
0.0
6,837.2
16.6
0.0
CWT
California Water Service Group
55.51
1.4
2,672.3
45.2
62.6
FMCB
Farmers & Merchants Bancorp (California)
770.00
1.8
606.0
11.5
21.0
LANC
Lancaster Colony Corp.
141.09
1.8
3,879.0
25.8
46.6
NDSN
Nordson Corp.
145.29
1.0
8,352.7
26.1
25.1
NWN
Northwest Natural Holding Co.
70.06
2.7
2,132.8
29.6
80.3
PH
Parker-Hannifin Corp.
183.32
1.7
23,556.4
15.7
27.1
SCL
Stepan Co.
95.18
1.0
2,147.0
21.0
21.5
SJW
SJW Group
73.22
1.6
2,082.5
39.9
63.2
TR
Tootsie Roll Industries, Inc.
34.98
1.0
2,292.4
39.2
39.5
MO
Altria Group, Inc.
44.28
7.2
82,719.5
13.1
95.0
VZ
Verizon Communications, Inc.
60.41
4.0
249,855.8
15.8
62.9
CMCSA
Comcast Corp.
45.93
1.7
208,751.1
17.3
30.1
TDS
Telephone & Data Systems, Inc.
25.55
2.5
2,925.8
18.8
47.8
JW/A
0.00
0.0
0.0
MDP
Meredith Corp.
35.58
6.3
1,609.3
-50.5
-317.7
NKE
NIKE, Inc.
95.56
0.9
149,172.0
34.8
32.1
TJX
The TJX Cos., Inc.
60.49
1.4
73,354.4
24.0
33.8
ROST
Ross Stores, Inc.
113.03
0.8
40,886.3
25.5
21.6
BBY
Best Buy Co., Inc.
69.88
2.7
18,418.5
12.4
33.8
HAS
Hasbro, Inc.
122.39
2.1
15,445.7
49.7
106.4
TIF
Tiffany & Co.
91.58
2.4
11,062.8
19.8
48.3
COLM
Columbia Sportswear Co.
101.22
0.9
6,838.1
22.4
20.8
PII
Polaris Industries Inc.
89.57
2.7
5,474.8
17.0
46.0
WSM
Williams-Sonoma, Inc.
70.29
2.6
5,484.2
15.9
41.1
AAN
Aaron's, Inc.
71.79
0.2
4,849.2
23.9
4.5
CBRL
Cracker Barrel Old Country Store, Inc.
154.84
3.3
3,723.9
16.7
54.3
MNRO
Monro, Inc.
79.48
1.0
2,640.6
32.3
33.3
ISCA
International Speedway Corp.
44.99
1.0
1,956.4
25.5
26.6
PM
Philip Morris International, Inc.
79.85
5.7
124,233.8
16.6
95.6
COST
Costco Wholesale Corp.
302.40
0.8
132,952.3
36.3
29.3
GIS
General Mills, Inc.
52.96
3.7
32,008.7
17.0
62.9
K
Kellogg Co.
62.21
3.6
21,190.7
24.7
88.9
CHD
Church & Dwight Co., Inc.
73.76
1.2
18,225.8
30.0
36.3
KR
The Kroger Co.
24.43
2.4
19,583.6
11.9
28.3
BF/B
140779
0.00
0.0
0.0
SJM
The J. M. Smucker Co.
108.29
3.2
12,350.3
23.0
72.8
BG
Bunge Ltd.
55.05
3.6
7,792.7
14.6
53.0
CASY
Casey's General Stores, Inc.
163.68
0.7
6,020.6
27.4
19.9
FLO
Flowers Foods, Inc.
21.89
3.3
4,630.0
25.8
86.0
JJSF
J&J Snack Foods Corp.
195.50
1.0
3,683.4
39.9
39.7
NUS
Nu Skin Enterprises, Inc.
43.13
3.4
2,395.7
19.2
65.5
VGR
Vector Group Ltd.
11.86
12.5
1,752.8
22.2
278.2
UVV
Universal Corp.
53.83
5.6
1,344.2
14.6
81.4
ANDE
The Andersons, Inc.
18.38
3.7
599.2
14.7
54.1
EPD
Enterprise Products Partners LP
27.37
6.3
59,913.2
11.9
75.1
ET
Energy Transfer LP
12.56
9.7
32,994.6
10.0
97.3
OXY
Occidental Petroleum Corp.
40.33
7.7
36,074.4
8.0
61.6
OKE
ONEOK, Inc.
68.67
5.0
28,358.5
22.6
111.9
MMP
Magellan Midstream Partners LP
64.99
6.1
14,843.9
10.8
65.6
HP
Helmerich & Payne, Inc.
36.65
7.7
4,010.8
-53.7
-415.8
HEP
Holly Energy Partners LP
21.26
12.5
2,241.7
11.8
148.2
TRV
The Travelers Cos., Inc.
140.48
2.2
36,579.0
13.9
31.0
PRU
Prudential Financial, Inc.
89.38
4.3
35,930.8
9.0
38.1
AMP
Ameriprise Financial, Inc.
140.49
2.6
18,385.9
10.2
26.7
PFG
Principal Financial Group, Inc.
55.49
3.9
15,470.4
10.4
40.1
WRB
W.R. Berkley Corp.
70.83
0.6
12,974.4
19.5
11.3
FDS
FactSet Research Systems, Inc.
251.77
1.1
9,631.7
BRO
Brown & Brown, Inc.
36.30
0.9
10,210.3
26.3
22.9
ERIE
Erie Indemnity Co.
186.42
1.9
8,611.0
28.4
53.9
TMK
Torchmark Corp.
88.10
0.8
9,685.8
13.7
10.3
AFG
American Financial Group, Inc.
103.58
1.5
9,316.2
13.0
19.4
SEIC
SEI Investments Co.
58.62
1.1
8,853.0
18.6
21.0
RNR
RenaissanceRe Holdings Ltd.
189.97
0.7
8,389.5
14.0
9.9
IVZ
Invesco Ltd.
15.63
7.7
14,685.8
10.7
83.1
AIZ
Assurant, Inc.
125.94
1.9
7,698.8
21.4
40.1
ORI
Old Republic International Corp.
23.75
3.3
7,201.0
9.5
31.7
UNM
Unum Group
28.05
3.7
5,852.1
11.3
41.8
BOKF
BOK Financial Corp.
78.11
2.6
5,561.0
11.6
29.6
CFR
Cullen/Frost Bankers, Inc.
89.67
3.0
5,618.4
12.5
38.0
THG
The Hanover Insurance Group, Inc.
136.04
1.7
5,380.9
18.5
31.8
AXS
AXIS Capital Holdings Ltd.
63.40
2.5
5,322.2
48.8
122.3
EV
Eaton Vance Corp.
44.55
3.1
5,054.9
12.5
39.3
PB
Prosperity Bancshares, Inc.
69.90
2.3
4,781.0
14.8
33.6
RLI
RLI Corp.
96.24
0.9
4,310.3
LAZ
Lazard Ltd.
37.04
4.8
3,958.9
11.1
53.8
UBSI
United Bankshares, Inc. (West Virginia)
38.32
3.5
3,903.7
15.2
54.0
OZK
Bank OZK
28.36
3.0
3,647.1
8.9
27.0
EVR
Evercore, Inc.
76.62
2.7
3,055.0
8.6
23.2
UMBF
UMB Financial Corp.
64.61
1.8
3,170.3
16.0
29.4
CBU
Community Bank System, Inc.
63.12
2.4
3,256.7
19.1
45.9
MCY
Mercury General Corp.
54.41
4.6
3,011.9
15.4
70.8
AEL
American Equity Investment Life Holding Co.
23.95
0.0
2,178.9
10.2
0.0
BANF
BancFirst Corp. (Oklahoma)
56.28
2.1
1,837.1
14.0
29.8
WABC
Westamerica Bancorporation
63.52
2.5
1,713.9
22.6
57.3
TMP
Tompkins Financial Corp.
81.71
2.4
1,233.7
15.6
37.7
SRCE
1st Source Corp.
46.41
2.2
1,185.1
13.9
31.0
SBSI
Southside Bancshares, Inc.
34.62
3.5
1,168.4
15.8
55.2
CTBI
Community Trust Bancorp, Inc. (Kentucky)
42.34
3.4
752.7
11.7
40.3
BMRC
Bank of Marin Bancorp
41.88
1.7
571.4
17.0
28.9
FLIC
The First of Long Island Corp.
22.94
3.0
566.0
13.9
41.2
WHG
Westwood Holdings Group, Inc.
27.92
10.2
249.7
18.0
183.0
SYK
Stryker Corp.
215.56
0.9
80,426.5
22.7
21.4
MCK
McKesson Corp.
150.51
1.0
27,829.9
49.8
51.7
ABC
AmerisourceBergen Corp.
89.50
1.8
18,645.2
19.8
35.0
WST
West Pharmaceutical Services, Inc.
141.61
0.4
10,443.6
45.8
19.4
CHE
Chemed Corp.
417.85
0.3
6,653.0
33.3
9.6
PRGO
Perrigo Co. Plc
54.39
1.4
7,400.0
84.4
121.1
ENSG
The Ensign Group, Inc.
40.88
0.5
2,182.4
20.9
9.6
ATRI
Atrion Corp.
799.96
0.7
1,483.9
41.1
27.7
NHC
National HealthCare Corp.
81.53
2.5
1,249.0
16.7
41.5
UNP
Union Pacific Corp.
163.68
2.1
115,317.5
19.3
39.7
LMT
Lockheed Martin Corp.
377.06
2.3
106,481.0
18.2
41.6
NOC
Northrop Grumman Corp.
356.27
1.4
60,280.2
17.3
23.9
CSX
CSX Corp.
69.78
1.3
55,696.7
16.6
22.3
RTN
Raytheon Co.
199.35
1.8
55,517.8
18.3
33.3
WM
Waste Management, Inc.
116.28
1.7
49,329.7
28.1
47.3
FDX
FedEx Corp.
150.70
1.7
39,319.1
88.3
152.3
RSG
Republic Services, Inc.
86.11
1.7
27,619.9
26.5
46.2
LHX
L3Harris Technologies, Inc.
200.94
1.4
44,724.2
25.0
34.1
CMI
Cummins, Inc.
167.64
2.7
26,451.2
10.2
27.7
FAST
Fastenal Co.
36.02
2.4
20,654.9
26.4
62.3
EXPD
Expeditors International of Washington, Inc.
74.39
1.3
12,699.9
20.2
25.8
CHRW
C.H. Robinson Worldwide, Inc.
86.66
2.3
11,731.9
17.2
38.9
ROL
Rollins, Inc.
35.63
1.1
11,668.3
51.6
57.4
JBHT
J.B. Hunt Transport Services, Inc.
116.18
0.9
12,404.3
CSL
Carlisle Cos., Inc.
142.45
1.1
8,063.5
20.0
22.4
GGG
Graco, Inc.
46.16
1.3
7,699.7
22.6
29.9
TTC
The Toro Co.
73.68
1.2
7,854.4
28.6
33.9
HEI
HEICO Corp.
120.66
0.1
16,186.9
52.0
5.6
HUBB
Hubbell, Inc.
134.24
2.5
7,303.9
19.8
48.6
RHI
Robert Half International, Inc.
54.46
2.2
6,402.4
14.2
30.7
DCI
Donaldson Co., Inc.
52.06
1.5
6,569.7
25.0
38.4
LECO
Lincoln Electric Holdings, Inc.
87.78
2.1
5,423.0
17.7
36.3
ITT
ITT, Inc.
59.35
0.9
5,222.8
17.3
16.4
MSA
MSA Safety, Inc.
112.18
1.4
4,343.5
35.5
49.4
RBC
Regal Beloit Corp.
72.92
1.6
3,057.9
12.1
18.9
MSM
MSC Industrial Direct Co., Inc.
72.00
3.4
3,974.5
13.5
46.5
R
Ryder System, Inc.
51.85
4.2
2,765.4
8.6
35.9
BRC
Brady Corp.
55.57
1.5
2,945.1
22.3
34.1
FELE
Franklin Electric Co., Inc.
48.73
1.1
2,258.1
23.7
25.8
HI
Hillenbrand, Inc.
29.98
2.8
1,878.8
13.3
37.3
HCSG
Healthcare Services Group, Inc.
24.77
3.2
1,835.8
21.7
68.4
MGRC
McGrath RentCorp
67.36
2.1
1,633.7
18.7
39.7
TNC
Tennant Co.
69.81
1.2
1,271.0
33.5
41.8
MATW
Matthews International Corp.
35.60
2.2
1,121.0
18.0
40.0
LNN
Lindsay Corp.
90.02
1.4
971.0
172.4
237.5
GRC
The Gorman-Rupp Co.
34.90
1.5
912.0
24.1
36.5
MSFT
Microsoft Corp.
139.69
1.3
1,066,590.4
27.3
36.0
V
Visa, Inc.
177.94
0.5
309,330.9
34.1
18.4
IBM
International Business Machines Corp.
134.26
4.8
118,937.6
15.5
73.7
ACN
Accenture Plc
186.04
1.6
118,533.7
24.8
39.0
TXN
Texas Instruments Incorporated
130.13
2.3
121,492.0
23.4
52.6
QCOM
QUALCOMM, Inc.
78.97
3.1
96,000.7
27.7
87.0
ADI
Analog Devices, Inc.
110.00
1.9
40,634.7
26.9
49.9
XLNX
Xilinx, Inc.
94.91
1.5
23,974.7
25.5
39.0
MCHP
Microchip Technology, Inc.
95.69
1.5
22,778.4
60.9
92.9
MXIM
Maxim Integrated Products, Inc.
58.14
3.2
15,761.5
19.3
61.0
BR
Broadridge Financial Solutions, Inc.
125.38
1.5
14,350.1
30.1
46.6
JKHY
Jack Henry & Associates, Inc.
143.40
1.1
11,034.6
40.7
43.7
BMI
Badger Meter, Inc.
56.54
1.1
1,646.1
35.6
39.0
CASS
Cass Information Systems, Inc.
51.93
1.8
752.4
24.8
45.4
IFF
International Flavors & Fragrances, Inc.
119.45
0.0
12,754.3
34.6
0.0
RPM
RPM International, Inc.
68.79
2.0
8,920.7
29.5
60.1
RGLD
Royal Gold, Inc.
120.44
0.9
7,899.9
83.9
72.8
WLK
Westlake Chemical Corp.
61.21
1.6
7,851.3
12.8
20.9
ALB
Albemarle Corp.
68.22
2.1
7,230.4
13.2
27.3
ATR
AptarGroup, Inc.
116.55
1.2
7,464.0
33.9
40.1
SON
Sonoco Products Co.
57.26
2.9
5,730.4
18.9
54.7
SLGN
Silgan Holdings, Inc.
30.30
1.4
3,368.6
16.7
23.2
BCPC
Balchem Corp.
102.30
0.0
3,310.1
42.1
0.0
SXT
Sensient Technologies Corp.
66.51
2.1
2,814.6
19.1
40.5
FUL
H.B. Fuller Co.
47.82
1.3
2,438.0
17.4
22.9
KWR
Quaker Chemical Corp.
163.14
0.9
2,882.2
38.2
35.0
HWKN
Hawkins, Inc.
41.10
2.2
438.3
17.4
38.8
DLR
Digital Realty Trust, Inc.
131.77
3.2
27,453.4
120.7
383.0
O
Realty Income Corp.
78.59
3.4
25,009.5
60.0
204.4
ESS
Essex Property Trust, Inc.
328.66
2.3
21,602.2
52.8
122.5
WPC
W.P. Carey, Inc.
91.48
4.5
15,623.6
32.3
145.4
ELS
Equity LifeStyle Properties, Inc.
68.19
1.7
12,415.2
46.0
78.4
NNN
National Retail Properties, Inc.
56.76
3.5
9,742.1
39.8
140.3
OHI
Omega Healthcare Investors, Inc.
44.20
6.0
9,648.5
34.6
206.8
NHI
National Health Investors, Inc.
83.57
4.9
3,623.7
23.2
113.7
SKT
Tanger Factory Outlet Centers, Inc.
16.10
8.7
1,506.1
20.8
181.1
UHT
Universal Health Realty Income Trust
106.24
2.5
1,461.5
84.5
214.7
UBA
Urstadt Biddle Properties, Inc.
23.77
4.6
947.4
37.9
174.4
NEE
NextEra Energy, Inc.
231.09
2.0
112,945.5
33.0
67.3
DUK
Duke Energy Corp.
95.17
3.9
69,341.0
21.0
81.9
SO
The Southern Co.
61.06
4.0
63,821.7
14.3
56.5
D
Dominion Energy, Inc.
82.38
4.3
67,709.4
55.3
235.2
XEL
Xcel Energy, Inc.
63.67
2.5
32,790.8
26.0
64.1
WEC
WEC Energy Group, Inc.
92.90
2.5
29,304.0
26.8
65.9
ES
Eversource Energy
85.12
2.4
27,545.0
31.4
76.7
EIX
Edison International
70.56
3.5
25,266.8
-92.7
-320.8
AWK
American Water Works Co., Inc.
122.42
1.6
22,115.5
38.1
59.4
PPL
PPL Corp.
32.09
5.1
23,176.9
13.0
66.7
CMS
CMS Energy Corp.
63.68
2.3
18,071.6
30.9
71.8
EVRG
Evergy, Inc.
63.16
3.0
14,872.1
26.8
79.9
CNP
CenterPoint Energy, Inc.
28.71
3.9
14,418.7
25.1
98.9
ATO
Atmos Energy Corp.
111.84
1.8
13,219.6
26.4
48.6
BIP
Brookfield Infrastructure Partners LP
48.46
4.0
19,743.3
-2,550.5
-10,236.8
LNT
Alliant Energy Corp.
52.74
2.6
12,526.9
24.4
63.8
WTR
Aqua America, Inc.
46.35
1.9
10,001.3
60.6
114.6
OGE
OGE Energy Corp.
42.62
3.4
8,531.5
20.9
71.7
UGI
UGI Corp.
48.14
2.2
8,392.6
25.3
56.7
MDU
MDU Resources Group, Inc.
27.60
2.9
5,494.0
18.8
54.8
POR
Portland General Electric Co.
56.49
2.6
5,048.6
25.3
65.8
SWX
Southwest Gas Holdings, Inc.
88.86
2.4
4,827.3
23.4
56.1
BKH
Black Hills Corp.
78.19
2.5
4,774.5
20.6
52.4
NFG
National Fuel Gas Co.
44.83
3.8
3,869.5
13.1
49.9
SR
Spire, Inc. (Missouri)
84.31
2.8
4,283.7
22.3
62.0
NJR
New Jersey Resources Corp.
43.55
2.7
3,918.6
28.6
76.8
NWE
NorthWestern Corp.
74.51
3.0
3,758.5
17.4
52.7
SJI
South Jersey Industries, Inc.
32.07
3.6
2,962.9
40.3
143.6
MGEE
MGE Energy, Inc.
76.94
1.8
2,667.4
31.2
54.8
CPK
Chesapeake Utilities Corp.
93.49
1.6
1,533.6
25.4
41.2
MSEX
Middlesex Water Co.
65.49
0.0
1,085.0
31.8
0.0
CMA
Comerica, Inc.
64.59
4.0
9,647.2
8.1
32.7
TCO
Taubman Centers, Inc.
36.81
7.2
2,253.1
49.8
359.6
Ticker Name Price Dividend Yield Market Cap ($M) P/E Ratio Payout Ratio
McDonald’s is one of just 57 Dividend Aristocrats, a group of S&P 500 stocks that have increased their dividends for at least 25 consecutive years.
This track record of dividend excellence is certainly attractive to shareholders, and McDonald’s continues to be a favorite for growth investors, as well as those seeking a meaningful, growing dividend payment.
Business Overview
McDonald’s is the largest fast food operator in the world with 38,000 locations in more than 100 countries worldwide. The size and scale the company operates on is unparalleled in terms of physical presence. Only about 7% of the company’s locations are owned by McDonald’s; the remaining 93% are franchised.
McDonald’s has about 5,000 unique global franchisees, as most franchisees own more than one location. McDonald’s has undergone a years-long transition from a more heavily company-owned store mix, to franchising nearly all of its locations as part of its growth and capital return strategy, and it owns fewer than 3,000 locations today.
Revenue topped out at $28 billion in 2013 before the refranchising effort began, and today, McDonald’s produces around $21 billion in annual revenue. Shares have performed extremely well in recent years, and as a result, the company’s market capitalization is up to $157 billion.
McDonald’s has invested in menu innovation in recent years, such as premium coffee through its McCafe platform, more upscale desserts, as well as premium burgers that have helped drive traffic and higher average ticket prices over time.
McDonald’s is positioning itself in the market as everything to everyone, from breakfast items and premium coffee drinks, to the lunch hour with its chicken sandwiches, premium burgers, as well as its long-time favorites. The formula has worked quite well in recent years, as McDonald’s has generated strong earnings growth.
Growth Prospects
McDonald’s history of growth has been somewhat lumpy in the past decade, but more recently, the company’s asset-light, franchisee-heavy strategy has boosted earnings growth. Earnings-per-share grew at an average rate of 8% annually since 2008, which is quite impressive for a company the size of McDonald’s. Growth stagnated in 2013, followed by declining earnings-per-share in 2014 as it struggled with a stale menu and a group of outdated restaurants. This combination drove traffic lower, and with it, profits as well.
McDonald’s growth plan, which has been in place for a few years now, has fixed those issues. The “new” McDonald’s is much more efficient, has updated thousands of stores globally, and its menu innovation rivals any other fast food operator. These factors have driven comparable sales up in recent years, which has provided the company with leverage on its costs, driving margins and profits higher.
Indeed, from 2015 to 2018, McDonald’s grew its earnings-per-share at an average annual rate of nearly 17%. That is a highly impressive growth rate for such a large company with ~40,000 locations globally, and is the product of prudent planning and execution. While we see double-digit earnings-per-share growth as unsustainable over the long-term, simply given how far the company has come already, we think 6% annual EPS growth is a realistic expectation in the years to come.
McDonald’s has seen growth in recent years through its all-day breakfast menu, as well as some of the menu innovation discussed above. The all-day breakfast menu capitalized on the company’s dominant position in fast food breakfast, and extended that advantage throughout the entire day. This initiative alone has driven traffic growth for years now, and its willingness to step outside the box and take a risk is part of what has allowed the company to produce such strong growth numbers.
The advantage to the refranchising effort, wherein the company sold many of its restaurants to franchisees, is that it requires much lower capex and operating costs. While it obviously reduces revenue at the same time, the franchise fee revenue that is received is very high-margin, much more so than company-owned store revenue. This has afforded the company outstanding profitability growth, albeit on lower total revenue, since the refranchising effort began. As an example, McDonald’s produced operating margins of 28.9% of revenue in 2015. This year, McDonald’s is on pace to produce ~42% operating margins thanks to its asset-light operating model.
Looking forward, we see 6% average annual earnings-per-share growth, driven by rising revenues, margin growth, and share repurchases. Revenue should continue to rise given that the company’s comparable sales are moving in the right direction, and that revenue growth provides leverage on the company’s operating costs, improving margins. McDonald’s has also committed to strong shareholder returns of capital, so we expect a small tailwind to materialize from a lower float each year.
Recession Performance
Many restaurant chains, do not perform particularly well during recessions. Consumers tend to pull back discretionary spending when times are tight, which includes eating at restaurants, and the weaker ones suffer as a result. McDonald’s, by contrast, actually grew its earnings-per-share every year during the Great Recession. Arguably, McDonald’s is a rare company that could grow earnings if another recession occurs, as consumers scale down their dining budgets to fast food.
Earnings-per-share grew 27% in 2007, 26% in 2008, and another 8% in 2009. This outstanding recession performance track record is another reason why McDonald’s is an attractive dividend stock. When a company is able to maintain (or increase) its dividend during tough economic times, it gives shareholders piece of mind. McDonald’s has been able to do that during every recession since it began paying dividends 43 years ago.
We see the company’s dividend as very safe, even during recessions, because consumers flock to value during recessions. As McDonald’s offers significant value for money to consumers with its budget offerings, we don’t see the next recession as a particularly large risk to the company’s earnings or dividend. McDonald’s is a defensive stock in a sector where investors do not find many defensive stocks, highlighting the exemplary operating history this company possesses.
Dividend Analysis
Given its very long history of dividend increases, McDonald’s has been a favorite for income investors for decades. McDonald’s is a Dividend Aristocrat, and is only seven years of increases away from being a Dividend King, which is the most prestigious title a dividend stock can achieve. For much of the past decade, the company’s dividend yield was in excess of 3%. However, the recent rally in shares has sent the yield down to 2.4% at present, so it isn’t quite offering as high of a yield as it once did.
However, McDonald’s continues to boost its payout at strong rates, including the most recent dividend increase of 8%, put into place in September. The new annual payout is $5 per share, which is only about 63% of our earnings-per-share estimate of $7.95 for this year. McDonald’s has gradually increased its payout ratio in recent years as it has become more serious about returning excess cash to shareholders, of which there is plenty.
Free cash flow per share has risen from $3.48 in 2009 to a projected ~$7.00 this year, so despite the operating challenges that persisted during the past decade, McDonald’s has been able to generate plenty of excess cash. This growth in cash generation not only makes it easier to maintain the dividend payment, but also to grow it each year. As earnings continue to climb, cash generation will as well, aided by the company’s franchise-heavy model that doesn’t require huge investments in new stores. Franchisees shoulder that burden, meaning the benefit of the new model is stronger cash generation, which helps McDonald’s raise the dividend over time.
Given this, as well as the relatively low payout ratio, we see McDonald’s dividend safety as outstanding. Not only will the payout almost certainly continue to grow for the foreseeable future, but we don’t see a recession as a material risk to the company’s dividend growth streak.
The following video discusses our view of McDonald’s dividend safety in greater detail:
McDonald’s does have a significant long-term debt load on its balance sheet, totaling nearly $33 billion as of the end of the most recent quarter. That is in excess of five times its annual net income of ~$6 billion, so it is certainly meaningful. In addition, servicing that debt has become more expensive over time as the amount of liabilities has grown, and this year, interest expense is expected to top a billion dollars. Despite this, we don’t see debt as hampering the company’s ability to return capital to shareholders as interest expense is just ~12% of operating income.
Long-term debt grew quickly beginning in 2015 and was used for a variety of purposes, including buying back shares to reduce the float. However, growth in the company’s long-term debt has slowed significantly of late, and we see modest long-term debt growth on the horizon. This should help stabilize interest expense, and thereby gradually decrease the percentage of operating income that is consumed by interest expense.
Final Thoughts
McDonald’s, over time, has been the model for restaurant chains in terms of operating excellence. The company’s vast global scale and recent innovation have given it renewed growth. This means its dividend will almost certainly continue to grow for many years to come, and we see the company reaching Dividend King status in seven years’ time.
While McDonald’s has faced its fair share of challenges over the years – some of which were self-inflicted – it has always come out the other side stronger than before. We see recession risk as very low in terms of earnings and the dividend, so McDonald’s remains one of the best stocks in our coverage universe in terms of safety and growth potential. Its defensive nature and strong growth outlook make it attractive for investors that want a strong and growing payout over time.