John Ballard, The Motley Fool Thu, November 12, 2026 at 1:20 PM EST 3 min read MCD -0.22% NVDA -4.52% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
McDonald's (NYSE:MCD) just marked 50 straight years of dividend increases with a 4% raise. That makes it a Dividend King, one of the fewer than 60 U.S. public companies with at least 50 straight years of annual increases.
At the Nov. 9 close of $281.44, $10,000 buys 35 shares. At the current quarterly rate of $1.93, or $7.72 a year, that pays about $274 annually, a 2.7% yield. And the business behind it generates cash flow from a lucrative franchise model that can sustain it.
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About 95% of McDonald's restaurants are franchised. Franchisees generally pay rent and royalties based on a percentage of sales, a model designed for stable and predictable revenue. In 2025, McDonald's generated $7.2 billion of free cash flow, covering $5.1 billion of dividend payments to shareholders.
Restaurant economics should improve, helping to grow cash flow and the dividend. In September, management laid out a plan to increase gross restaurant-level efficiency by 2.5 percentage points. That's about $100,000 in gross annual cash flow for an average U.S. restaurant.
The payout equals about 70% of trailing free cash flow and 59% of earnings per share, a sustainable level for a global restaurant giant. Investors should expect future dividend increases to track earnings growth, with analysts currently modeling around 6% annualized earnings growth.
Weak U.S. traffic could continue in the near term. Third-quarter U.S. comparable sales slipped 0.2% as higher checks largely offset fewer guest visits, as customers remain value-focused. Weaker traffic could slow sales relative to rent and royalties, but this is a near-term issue, not a headwind that should persist over the long term.
At 21.5 times forward earnings as of Nov. 9, McDonald's stock is reasonably priced for a Dividend King with a clear plan to strengthen restaurant economics. It remains a solid buy-and-hold for income investors.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.
McDonald's Is a Dividend King With 50 Years of Raises. Here's What $10,000 Invested Pays. was originally published by The Motley Fool
