McDonald's Raises Quarterly Dividend 3.8% to $1.93

McDonald's Corporation raised its quarterly dividend 3.8% to $1.93 a share from $1.86, bringing the annualized payment to $7.72. The shares will trade ex-dividend on December 1, 2026, and the payment is scheduled for December 15, 2026.

Why the dividend changed

McDonald's tied the increase to the durability of its business model, resilient cash flow and disciplined capital allocation. Chief Financial Officer Ian Borden said the milestone reflected the company's commitment to financial discipline and shareholder returns. The board continues to rank the dividend behind investments in business growth and ahead of share repurchases in its capital-allocation framework, according to the dividend declaration.

Recent performance provides context for that decision. McDonald's reported that second-quarter global comparable sales increased 1.3%, including growth in each operating segment. Consolidated revenue increased 4%, operating income increased 3% and diluted earnings per share increased 6%. Management nevertheless identified room to improve execution in the U.S., where comparable sales increased 0.8%, and appointed Skye Anderson to lead that market. Those results indicate that the dividend increase came amid continued companywide growth but comparatively modest momentum in McDonald's largest market, according to the quarterly results.

Cash generation remained central to the decision. McDonald's reported $5.2 billion of cash provided by operations for the first six months of 2026, exceeding capital expenditures by $3.7 billion. Its guidance called for 2026 capital expenditures of between $3.7 billion and $3.9 billion and free-cash-flow conversion in the low-to-mid 80% range, according to its Form 10-Q.

Dividend track record

The latest increase continues an established pattern of annual raises. McDonald's said in its declaration that this was its 50th consecutive year of dividend increases. The company began paying a dividend in 1976.

The recent payment history shows a step-up schedule rather than irregular changes. The quarterly rate was $1.77 for the ex-dividend dates of March 3, June 2 and September 2, 2025. It increased to $1.86 for December 1, 2025, and remained there through the ex-dividend date of September 1, 2026. The new $1.93 rate begins with the December 1, 2026, ex-dividend date.

Full-year payments rose from $5.04 a share in 2020 to $7.17 in 2025. Annual growth accelerated from 4.2% in 2021 to 7.8% in 2022 and 10.1% in 2023, before moderating to 8.8% in 2024 and 5.8% in 2025. The five-year record equates to 7.2% annual growth. The new 3.8% increase extends the progression at a slower rate than each of those recent full-year increases.

Is the dividend covered?

The dividend consumes 60% of earnings. That ratio indicates earnings cover the distribution, while retaining part of reported profit for restaurant development, technology, debt service and other corporate uses.

SmarterDividends rates the dividend A with a safety score of 86. That falls within the very safe range of score 80-100. The grade reflects strong coverage and payment consistency, but it does not eliminate operating risks. McDonald's is simultaneously funding a large restaurant-development program and investments under its NEXT strategy, making continued cash generation important to maintaining coverage.

Yield and valuation

At a share price of $250.83, the annual dividend of $7.72 produces a 3.08% forward yield. That is above the 2.54% median forward yield for the Consumer Cyclical sector. An investor holding 100 shares would receive $772.00 in annual dividend income at the new rate, assuming the quarterly payment remains unchanged.

The shares have recorded a 20.3% loss over one year. Even after that decline, SmarterDividends estimates fair value at $164.28 and classifies the stock as overvalued, with 34% downside to fair value. The comparison separates two aspects of the event: the dividend offers a yield above the sector median, while the valuation estimate remains below the current market price.

What to watch

The immediate date is December 1, 2026, when the shares trade ex-dividend. The $1.93 payment is scheduled for December 15, 2026.

Beyond the payment, the operating focus is McDonald's NEXT strategy. Management is directing capital toward menu improvements, personalized customer engagement, restaurant modernization and operating efficiency. The company has also set longer-term goals for restaurant expansion, margins and free-cash-flow conversion, according to its NEXT strategy update. Upcoming results will show progress in the U.S. business, execution of the restaurant-development budget and whether cash generation remains aligned with both investment spending and the higher dividend.