Covered, compounding — at a fuller payout. A 3.11% yield on a 64.6% reported payout is covered, but fuller than most House cards: $1.93 a quarter, raised in September 2026 for the 50th consecutive year, making McDonald's a Dividend King. FY2025 free cash flow was $7.19 billion against $5.115 billion of dividends paid, so cash covers the rate even though the earnings payout leaves less retained than a lower-payout payer.
Key risk: U.S. consumer pressure — Q2 2026 U.S. comparable sales grew only 0.8% against 1.3% globally, and the franchised model still leaves the company exposed to menu-price resistance and higher costs passed through to operators.
Changes if: Free cash flow falls toward the $5.115 billion FY2025 dividend total, or the earnings payout pushes well past 64.6%. Cash coverage, not just earnings coverage, is the tripwire here.
- !Payout-coverage check: 64.6% of reported FY2025 EPS of $11.95 — $7.72 indicated — and about 71% of FY2025 free cash flow of $7.19 billion. Covered, but fuller than a low-payout payer, so less is retained.
- ✓Yield check: 3.11% indicated — $1.93/qtr × 4 at the $248.46 close on Oct. 23, 2026. Real, earned yield for a single stock, not a special or a return of capital.
- ✓Dividend growth check: 50 consecutive years of increases; the latest raise, declared Sep. 17, 2026, lifted the quarterly dividend 4%, from $1.86 to $1.93.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.