McDonald's Poised to Become Next Dividend King

McDonald's is just one dividend increase away from becoming a Dividend King, a rare distinction reserved for companies with at least 50 consecutive years of dividend increases. The other two contenders, Sherwin-Williams and Air Products & Chemicals, are not as close to reaching this milestone. McDonald's has increased its dividend every year since 1976, and its most recent increase took the quarterly payout from $1.77 to $1.86 per share.

The company's business model is a key factor in its ability to fund decades of dividend increases. Its franchise model generates predictable cash through royalty and rent flows from over 46,000 systemwide restaurants, which easily funds the payout.

While McDonald's is on track to become a Dividend King, it faces challenges such as declining US traffic, which could cap near-term dividend growth acceleration. Sherwin-Williams and Air Products & Chemicals are both established Aristocrats, but they are several years short of reaching the 50-year milestone.