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McDonald's Corporation (MCD)

Company Dividend Discount ModelIndustry: RestaurantsSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$139.73 - $232.50$180.66
Multi-Stage$169.79 - $185.53$177.52
Blended Fair Value$179.09
Current Price$292.17
Upside-38.70%
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 Rate9.10%9.10%9.10%
Growth Rate2.24%3.24%4.24%
Fair Value$139.73$180.66$232.50
Upside / Downside-52.17%-38.17%-20.42%

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 Rate9.10%9.10%9.10%
Growth Rate2.24%3.24%4.24%
Year 1 PV (M)5,213.605,264.595,315.59
Year 2 PV (M)5,326.985,431.705,537.44
Year 3 PV (M)5,405.485,565.655,728.96
Year 4 PV (M)5,453.035,669.535,892.42
Year 5 PV (M)5,473.225,746.196,029.93
PV of Terminal Value (M)95,015.0199,753.62104,679.45
Equity Value (M)121,887.31127,431.28133,183.78
Shares Outstanding (M)717.85717.85717.85
Fair Value$169.79$177.52$185.53
Upside / Downside-41.88%-39.24%-36.50%

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