McDonald's on Brink of Joining Exclusive Dividend Kings Club

McDonald's is on the verge of becoming a Dividend King, one of the most exclusive clubs in income investing. To join this elite group, a company must have at least 50 consecutive years of dividend increases. McDonald's has reached 49 consecutive annual dividend hikes and is expected to announce its next increase around its traditional fall board meeting.

The company's safety record looks solid, with a net margin of 31.9%, an operating margin of 46.1%, interest coverage of 7.83x, and a free cash flow yield of 4.09% that comfortably tops the current dividend yield of 2.98%. In its last quarter, McDonald's beat earnings estimates on revenue of $7.1 billion.

The franchise model behind McDonald's success is key to funding its decades-long streak of raises. The company earns a significant portion of its revenue from royalties and rent paid by over 46,000 systemwide restaurants around the world.