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McDonald's Corporation (MCD)

Company Dividend Discount ModelIndustry: RestaurantsSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$140.10 - $233.36$181.21
Multi-Stage$170.32 - $186.10$178.06
Blended Fair Value$179.64
Current Price$292.17
Upside-38.52%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS6.34%4.24%6.786.315.815.465.234.994.544.304.264.50
YoY Growth--7.44%8.75%6.37%4.42%4.77%10.01%5.40%1.01%-5.33%0.44%
Dividend Yield--2.17%2.25%2.08%2.21%2.33%3.02%2.41%2.75%3.29%3.58%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)8,415.00
(-) Cash Dividends Paid (M)5,061.00
(=) Cash Retained (M)3,354.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,683.001,051.88631.13
Cash Retained (M)3,354.003,354.003,354.00
(-) Cash Required (M)-1,683.00-1,051.88-631.13
(=) Excess Retained (M)1,671.002,302.132,722.88
(/) Shares Outstanding (M)717.85717.85717.85
(=) Excess Retained per Share2.333.213.79
LTM Dividend per Share7.057.057.05
(+) Excess Retained per Share2.333.213.79
(=) Adjusted Dividend9.3810.2610.84
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate2.24%3.24%4.24%
Fair Value$140.10$181.21$233.36
Upside / Downside-52.05%-37.98%-20.13%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)8,415.008,687.358,968.529,258.799,558.459,867.8210,163.85
Payout Ratio60.14%66.11%72.09%78.06%84.03%90.00%92.50%
Projected Dividends (M)5,061.005,743.566,465.017,227.148,031.838,881.049,401.56

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate2.24%3.24%4.24%
Year 1 PV (M)5,214.465,265.465,316.46
Year 2 PV (M)5,328.745,433.495,539.26
Year 3 PV (M)5,408.155,568.415,731.79
Year 4 PV (M)5,456.635,673.285,896.31
Year 5 PV (M)5,477.745,750.936,034.91
PV of Terminal Value (M)95,374.95100,131.52105,076.01
Equity Value (M)122,260.68127,823.09133,594.75
Shares Outstanding (M)717.85717.85717.85
Fair Value$170.32$178.06$186.10
Upside / Downside-41.71%-39.05%-36.30%

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