Dividend matchup: McDonald’s Corp (MCD) vs Yum! Brands (YUM)

By: ispeculatornew
Date posted: 01.19.2011 (5:00 am) | Write a Comment  (0 Comments)

      Post a Comment


Not that we want to focus on things that are bad for you, after looking at the dividend match up between Pepsi (PEP) and Coca-Cola (KO) but this time we go directly towards the two leading fast food chains; the one and only McDonald’s (MCD), one if not the most known brand in the world and Yum Brands (YUM), a much lesser known name simply because the company is not the main brand as you would usually know it by its main franchises; Pizza Hut, Kentucky Fried Chicken and Taco Bell among others. Both names are two formidable dividend payers and companies that have been able to keep up growth in their dividend payments. We will of course be doing the analysis following the 20 things that we look at when judging dividend stocks.

Without further wait, let’s get down to the match up:

Dividend Metrics:

[table “234” not found /]

Please note that the change in MCD dividend is not a huge drop but rather a change from a quarterly to a yearly dividend.


As mentioned above, the MCD chart seems to indicate a rapid growth followed by a drop, but rather it is simply a change from a quarterly payment, to a yearly and then back to quarterly. MCD’s dividend growth has actually been very impressive over the years. That being said, despite a smaller dividend yield, Yum has actually been on a tear in recent years as it continues to increase dividends at a quicker pace. It’s actually very close but I will give the edge to McDonald’s which pays out almost 3% and has been increasing dividends quickly for over 10 years


Business Metrics

[table “235” not found /]

Again, this is very very close given the fact that both companies have steady and reasonable growth. In the end, I do give a slight edge to YUM because of its faster sales growth, its brand diversification and its lower payout ratio which gives the company more latitude to increase payouts in the near to medium term.

Stock Metrics

[table “236” not found /]

It is very close, no doubt about it, a slight edge goes to YUM in terms of its trends analysis but otherwise, very tight

Industry and Overall Fit

No doubt, these companies are very similar and while McDonald’s has a much more international exposure, I think they are both diversified enough to keep up the growth for the long term. They would also be great fit in almost any passive income portfolio.

My Winner?

Personally, I would go with Yum Brands (YUM), even though both names would make great additions. I simply think that YUM will be able to increase its dividend payments more quickly than McDonald’s in the long term. Do you agree?

Disclosure: No positions on either of these stocks

If you liked this post, you can consider subscribing to our free newsletters here


No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.