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How McDonald's (MCD) Maintains its Status as a Leading Income Stock

By Vardah Gill | August 02, 2025, 12:59 AM

McDonald’s Corporation (NYSE:MCD) is included among the 11 Best Income Stocks to Buy According to Hedge Funds.

How McDonald’s (MCD) Maintains its Status as a Leading Income Stock
A cook in a busy kitchen assembling cheeseburgers for orders.

McDonald’s Corporation (NYSE:MCD) is easily recognized by its golden arches, but most of its locations— around 95 percent— are run by franchisees rather than the company itself. These franchised restaurants generate roughly 60% of the company’s yearly revenue.

Through its franchise model, McDonald’s Corporation (NYSE:MCD) earns income by collecting a percentage of sales as royalties and charging rent. Since franchisees handle much of the capital spending, this setup reduces costs for the company. However, in the recent quarter, McDonald’s reported a 1% decline in same-store sales. In the US, where around 40% of its sales come from, comparable sales dropped by 3.6% due to lower customer traffic. As a result, adjusted operating income also declined by 1%.

McDonald’s Corporation (NYSE:MCD) is just two years away from becoming a Dividend King. It has been raising its payouts for 48 consecutive years, which makes it one of the best dividend stocks for income investors. The company currently offers a quarterly dividend of $1.77 per share and has a dividend yield of 2.36%, as of July 31.

While we acknowledge the potential of MCD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 10 Best Shipping Stocks with Dividends and 10 Best and Safe Dividend Stocks to Buy Now

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