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Long-Term Dividend Champions: McDonald's & Coca-Cola

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  Published in Stocks and Investing on Tuesday, December 2nd 2025 at 21:30 GMT by The Motley Fool

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Top Dividend Picks for the Long Haul: Two Stocks to Hold for a Decade

For investors who prize the steady stream of income that dividends can provide, the search is always for companies that combine reliable cash flows with a track record of paying—and even growing—dividends year after year. A recent feature on MSN Money answered that call by spotlighting just two names that, according to the writers, are set to deliver attractive returns for the next decade. While the article’s tone is upbeat and its recommendations fairly conservative, it offers a useful framework for anyone looking to build a long‑term dividend portfolio.

1. McDonald’s Corp. (MCD) – “The Golden‑Archetype of a Food‑Service Dividend”

McDonald’s has long been a darling of income investors, and the MSN article does a good job of explaining why the fast‑food giant remains a top pick.

Dividend Fundamentals

• Yield: Roughly 2.1 % to 2.2 % (as of the time the article was written), a respectable figure for a blue‑chip company.
• Payout Ratio: About 43 % of earnings, comfortably below the 50 % ceiling that typically signals a healthy dividend policy.
• Dividend Growth: 28 consecutive years of dividend increases—a hallmark of a “Dividend Aristocrat.” The average annual growth rate has hovered around 7 % in recent years, reflecting a disciplined policy of reinvesting a majority of earnings back into the business.

Business Rationale

The article notes that McDonald’s benefits from:

• Global Footprint: Over 38,000 restaurants in more than 100 countries, providing geographic diversification.
• Franchise Model: Roughly 85 % of outlets are franchised, meaning the company earns consistent royalty income while limiting the capital burden of expansion.
• Resilience in a Crisis: The firm’s “Speedy Service” model has proven adaptable during downturns; sales fell only a modest amount in 2020 and have rebounded as consumer confidence returns.

Risk Considerations

The writers point out the typical risks: rising commodity prices (particularly beef and poultry), regulatory changes around food labeling, and the ever‑present threat of disruptive competitors. However, McDonald’s robust cash flow and strong balance sheet (a net debt‑to‑EBITDA of roughly 0.9×) mitigate these concerns.

Why Hold for Ten Years?

MSN’s piece emphasizes compounding dividends: reinvesting the 2.1 % yield into more shares and letting those shares earn dividends for another decade creates a cumulative return that can significantly outpace a purely capital‑gains strategy. The article includes a brief chart projecting the growth of a $10,000 investment over ten years, highlighting how the compounding effect can lift the nominal return to nearly 14 % annually when both dividend growth and share price appreciation are factored in.

2. Coca‑Cola Co. (KO) – “A Refreshingly Stable Beverage Dividend”

The second pick in the article is Coca‑Cola, a name that almost always comes up in dividend discussions. The writers give a balanced view that acknowledges both its strength and the subtle nuances of its business.

Dividend Fundamentals

• Yield: About 3.2 %–3.3 %, one of the higher yields among large caps.
• Payout Ratio: Roughly 73 % of earnings, indicating a fairly aggressive payout policy that still leaves room for reinvestment.
• Dividend Growth: 58 consecutive years of dividend increases, an impressive legacy of shareholder generosity. The recent decade saw an average growth of 4 %–5 % annually.

Business Rationale

Coca‑Cola’s appeal to long‑term investors, according to the MSN article, stems from:

• Brand Power: A global portfolio of beverages that includes not just soda but also bottled water, teas, juices, and low‑calorie options.
• Distribution Network: An integrated supply chain and a worldwide bottling partnership model that ensures consistent product delivery.
• Marketing Leverage: An investment in iconic advertising campaigns that keeps the brand at the top of consumers’ minds, translating into brand loyalty and repeat sales.

Risk Considerations

The writers caution about a few looming threats:

• Health Trends: A shift away from sugary drinks could depress demand.
• Regulatory Scrutiny: New taxes on sugary beverages in various jurisdictions could squeeze margins.
• Commodity Exposure: Fluctuations in sugar, corn, and aluminum prices could affect operating costs.

Nevertheless, Coca‑Cola’s diversified product mix and strong cash conversion cycle make it resilient. Its debt-to-equity ratio is modest, and the company routinely generates free cash flow that comfortably supports its dividend policy.

Ten‑Year Horizon

The article’s projection for Coca‑Cola underscores that the combination of a higher yield and a long track record of dividend growth translates into a robust total return. Even with modest price appreciation, the dividends alone can deliver an annualized return in the high‑single digits over a decade.

How the Article Guides Your Decision‑Making

The “Dividend Aristocrat” Test

Both McDonald’s and Coca‑Cola are part of the S&P 500 Dividend Aristocrats—companies that have increased dividends for at least 25 consecutive years. The MSN article uses this metric as a litmus test for reliability, suggesting that any company on this list is a safe bet for income‑focused investors.

The 2%+ Yield Rule

The writers argue that a yield of at least 2 % is a reasonable baseline for long‑term income investors. They note that yields below that threshold are often a red flag for underlying distress or unsustainable payout ratios. Both picks comfortably surpass that threshold.

Diversification Beyond the Two

While the article focuses on two stocks, the authors remind readers that a well‑rounded portfolio should include exposure to different sectors. They recommend considering a mix that includes utilities, consumer staples, and healthcare, as these industries tend to weather economic swings better than discretionary or financial sectors.

Practical Tips

• Reinvest Dividends: Use a dividend reinvestment plan (DRIP) to automatically purchase additional shares, thereby accelerating compounding.
• Monitor Payout Ratios: Watch for any sudden increases that could signal an unsustainable payout policy.
• Watch Macro Trends: Keep an eye on commodity prices and regulatory changes that could affect these companies’ cost structures.

Bottom Line

The MSN Money article distills the world of dividend investing into a clear, actionable narrative: choose companies with proven dividend histories, a healthy payout ratio, and a resilient business model, then hold for the long haul. McDonald’s and Coca‑Cola fit that profile remarkably well. Their solid yields, consistent growth, and dominant market positions give them the staying power to generate income over a decade, even if stock prices experience volatility.

For investors who prioritize stability and income over aggressive growth, these two stocks offer a compelling starting point. As always, it is wise to balance them with other asset classes and to stay vigilant for changes in macroeconomic conditions or company fundamentals that could alter the risk‑return landscape. Nonetheless, if you’re looking to add a dependable source of dividends to your portfolio that can comfortably be held for ten years or more, McDonald’s and Coca‑Cola are worth serious consideration.