McDonald’s vs Realty Income: Which Dividend Grows Faster Over the Next 10 Years?

Key Takeaways

• McDonald’s made its 50th straight yearly dividend raise on Sept. 17, and Realty Income declared its 136th raise since 1994 on Sept. 8.
• Both are landlords at heart: McDonald’s collected $10.44 billion of rent from its franchisees in 2025, and Realty Income rents to 1,798 tenants.
• Realty Income yields about 6% and McDonald’s about 3%, and each dividend is well covered on its own measure.
• Realty Income’s share count is about 3.7 times what it was in 2016, which has held its AFFO per share growth to about 4.5% a year.

McDonald’s (MCD) sells burgers, but a big chunk of its money is rent: franchisees paid it $10.44 billion in 2025, 63% of its franchise revenue. On Sept. 17, it raised its quarterly dividend 4% to $1.93 a share, calling it “a golden milestone with its 50th consecutive year of dividend increases.”

A pure landlord hit its own milestone nine days earlier. Realty Income (O), which rents to 1,798 tenants, declared what CEO Sumit Roy triumphantly called “the 136th dividend increase since Realty Income’s listing on the New York Stock Exchange in 1994.”

So which landlord’s dividend grows faster over the next 10 years?

Source: TIKR, prices at the Sept. 30, 2026 close; streaks from the companies’ September 2026 releases.

McDonald’s: a burger chain that owns the dirt

About 95% of McDonald’s’ restaurants are franchised. McDonald’s owns or leases the site, and the franchisee pays for the equipment and upkeep. It owns about 56% of the land and 80% of the buildings, up from 45% and 70% in 2016, and its rent grew 4.2% last year.

The burger side is wobblier: U.S. comparable sales rose just 0.8% last quarter, on a botched value-menu relaunch.

Its quarterly dividend has grown from $0.94 at the end of 2016 to $1.93, about 7.5% a year. The cash dividend payout ratio is a comfortable 67% TTM and a still-healthy 73% on 2026’s consensus. The forward ratio is higher because capex climbs to ~$3.7 to $3.9 billion for about 2,100 net new restaurants.

Free cash flow beat the dividend in all 10 years, and the cushion widened from $1.18 billion to $2.07 billion. That’s plenty of room to keep raising.

The risk: at its Sept. 23 Investor Day, McDonald’s committed about $8.5 billion through 2036 to support its franchisees, including rent relief. That could slow the rent growth that’s been so critical to its dividend.

Realty Income: more raises, smaller ones

McDonald’s raises once a year, by a lot. Realty Income raises four or five times a year, almost always by $0.0005 a month, or about 0.2% each time. Its monthly dividend has grown from $0.2020 in October 2016 to $0.2715, about 3.0% annual growth.

The properties are humming: occupancy is 98.8%, and re-leased space brought in 102.7% of the old rent. It raised this year’s investment plan to $10 billion, much of it industrial.

Of course, everyone who knows REITs knows you look at either funds from operations (FFO) or adjusted funds from operations (AFFO), the cash its properties earn after upkeep, rather than free cash flow. Realty Income’s AFFO payout ratio was a comfortable 75% in 2025 (the dividend ate up $3.22 of $4.28 a share in AFFO) and is 73% on 2026’s consensus.

AFFO per share rose every year, and the share of it paid out as dividends fell from about 83% to 75%. So it’s had room to raise faster. It just hasn’t.

The brake is new stock: its share count is about 3.7 times 2016’s, so AFFO per share grew only about 4.5% a year. Its debt (a necessity for REITs to fuel their expansion) leaves less slack, too: interest coverage is 2.4x, against McDonald’s 7.8x.

So which dividend grows faster?

Ultimately, I have to go with McDonald’s: its dividend should keep growing faster over the next 10 years. It has grown more than twice as fast over the last decade, free cash flow covers it with room to spare, and its rent keeps rising. With its share count still climbing, I’d expect more small raises.

So I see every reason to think that McDonald’s will grow its dividend faster. That said, I’m pretty sure Realty Income’s dividend will pay investors more. And here’s why:

$10,000 in McDonald’s pays about $330 in the first year and, growing 7.5% a year, about $633 in year 10. So, call it a 6.3% yield on your cash today. Not bad, and of course you want to consider capital appreciation as well. The same $10,000 in Realty Income pays about $610 now and, at 3.0% a year, about $796 in year 10 (about an 8% yield on today’s cash). At those rates, McDonald’s doesn’t catch up until about year 15. Realty Income’s streak of 136 raises is one I’m confident management will work very hard to extend.

Of course, Realty Income now funds far less of its growth with new stock: About 18% of this year’s investments, against 47% on average over the past three. If the share count stops climbing, its dividend could grow faster than its record. (But probably still not faster than McDonald’s.)

So what is McDonald’s stock actually worth?

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!