McDonald’s vs Realty Income Dividend Growth Showdown

McDonald’s and Realty Income, two dividend stalwarts, recently marked significant milestones in their dividend histories. McDonald’s announced its 50th consecutive annual dividend increase on September 17, raising its quarterly payout by 4% to $1.93 per share. Realty Income, known for its frequent dividend hikes, declared its 136th raise since 1994 on September 8, maintaining its reputation for steady increases.

Both companies operate as landlords in different ways. McDonald’s collects substantial rent from its franchisees, totaling $10.44 billion in 2025, which constitutes 63% of its franchise revenue. Realty Income, on the other hand, rents to 1,798 tenants and offers a higher yield of about 6% compared to McDonald’s 3%. Despite their different business models, both companies have well-covered dividends.

McDonald’s dividend growth has been robust, averaging 7.3% annually over the past five years, while Realty Income’s dividend has grown at a slower pace of 2.9% annually. The key difference lies in their approaches to raising dividends: McDonald’s makes one significant annual increase, whereas Realty Income raises its dividend multiple times a year in smaller increments. McDonald’s free cash flow has consistently covered its dividend payments, providing a comfortable cushion for future raises. However, Realty Income’s dividend growth has been tempered by its expanding share count, which has grown about 3.7 times since 2016, limiting AFFO per share growth to approximately 4.5% annually.

The debate over which company will grow its dividend faster over the next decade hinges on these dynamics. McDonald’s stronger historical growth and robust free cash flow coverage suggest it may continue to outpace Realty Income. However, Realty Income’s consistent raises and higher current yield make it an attractive option for income-focused investors. Ultimately, the choice between the two depends on an investor’s priorities: faster growth versus immediate income.