Battle of Prime Dividend Shares: Waste Administration vs. McDonald’s

Key Factors

• Waste Administration’s dividend is smaller, however powered by rising free money stream and a multiyear funding cycle that ought to help regular raises.

• McDonald’s affords the next dividend yield, however may even see slower dividend development.

• One of many two dividend shares appears barely extra compelling.

• 10 shares we like higher than Waste Administration ›

Shares of WM (NYSE: WM) and McDonald’s (NYSE: MCD) have each held investor curiosity in 2025 for his or her reliable money returns.

WM, previously generally known as Waste Administration, is the biggest North American waste companies supplier. The waste firm is tying dividend development to a rising free money stream outlook and a slate of high-return tasks in recycling, renewable pure gasoline, and newly built-in medical-waste operations. McDonald’s, the worldwide burger chain with a closely franchised mannequin, is leaning on worth promotions, loyalty, and digital to maintain comparable gross sales and earnings transferring in a uneven client surroundings.

The place to speculate $1,000 proper now? Our analyst group simply revealed what they consider are the 10 greatest shares to purchase proper now. Proceed »

The query for earnings traders is which dividend appears higher as we speak. Wanting on the fundamentals, one comes out forward as the higher long-term guess.

Picture supply: Getty Photos.

Waste Administration: Sturdy development prospects

WM’s newest quarter underscored a cash-generation story that more and more helps the dividend. Within the second quarter of 2025, administration affirmed an adjusted working earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) outlook with a midpoint of about $7.55 billion and raised full-year free money stream steerage to between $2.8 billion and $2.9 billion, up $125 million from preliminary steerage. Administration attributed a part of the raise to tax coverage restoring 100% bonus depreciation, whereas highlighting continued margin power within the core assortment and disposal enterprise and contributions from sustainability investments (recycling and renewable power).

Operationally, the quarter was stable: WM reported 12.1% year-over-year development in adjusted working EBITDA for its legacy waste enterprise, with this portion of its enterprise’s EBITDA margin coming in larger than 31%. Internet earnings additionally improved 12 months over 12 months.

Notably, CEO Jim Fish emphasised the corporate’s progress “on all fronts” within the firm’s second-quarter earnings launch, calling out core assortment and disposal power and the continuing integration of WM Healthcare Options — an added development vector alongside recycling and renewable power.

On the dividend itself, in December of final 12 months, WM elevated its payout fee by 10% for 2025 to $3.30 yearly ($0.825 quarterly). This provides WM a dividend yield of 1.5%, based mostly on the inventory worth, on the time of this writing. Importantly, the corporate’s payout ratio is about 47%, a conservative degree that leaves ample room for future dividend raises whereas nonetheless funding development tasks. In opposition to the up to date free money stream outlook, the dividend seems properly coated, leaving room for reinvestment and buybacks over time.

Some dangers embody the volatility of recycling commodity costs from quarter to quarter and the added complexity of integration work in healthcare companies. Nonetheless, with free money stream projected to comfortably exceed dividend outlays this 12 months, WM’s return profile appears anchored by money — and positioned for regular dividend development by the cycle.

McDonald’s: The larger yield

McDonald’s dividend is bigger in absolute {dollars} and supported by one of the crucial worthwhile fashions in world eating places. Within the second quarter of 2025, world comparable gross sales rose 3.8% (U.S. up 2.5%), consolidated income grew 5%, and earnings per share elevated 12% (7% when adjusting for one-time objects).

In McDonald’s second-quarter earnings launch, chairman and CEO Chris Kempczinski credited worth, advertising, and menu innovation for the efficiency, noting the corporate’s means to scale digital investments “at pace.”

The fast-food big raised its quarterly dividend 6% to $1.77 in September of final 12 months, reflecting confidence in its technique and regular money stream era. This places McDonald’s dividend yield at 2.3% — meaningfully forward of WM’s. However McDonald’s payout ratio stands at about 60%, a degree that gives much less flexibility than WM’s and indicators the dividend already consumes a bigger share of earnings.

With a closely franchised base and strong working margins, McDonald’s usually converts a significant share of income into earnings and money, which helps each the dividend and ongoing repurchases. Current updates additionally highlighted loyalty momentum, with systemwide gross sales to loyalty members at roughly $33 billion over the trailing 12 months, reinforcing the sturdiness of demand drivers.

That stated, traders ought to watch worth perceptions and site visitors amongst lower-income shoppers. Administration has leaned into worth choices to guard site visitors, and whereas this has helped comps just lately, strain on price-sensitive friends stays a variable to watch. Even so, the mix of brand name power, advertising scale, and digital attain provides McDonald’s levers to help regular earnings and money returns.

McDonald’s tends to commerce at a premium price-to-earnings a number of in comparison with some fast-food friends, reflecting the resilience of its franchised mannequin and margin profile. WM additionally usually instructions a premium, given its important companies and money visibility. For traders weighing the 2, each shares commerce at premium valuations, which makes the expansion path behind every payout particularly vital.

Finally, Waste Administration wins this battle. Its dividend yield is decrease as we speak, however the mixture of rising free money stream, conservative payout protection, and multiyear investments in recycling, renewable power, and healthcare companies give it stronger capability for dividend development. McDonald’s affords scale and rapid earnings, however WM’s trajectory factors to extra strong raises over time and clearer long-term money stream visibility, making it the higher dividend inventory for traders with a long-term horizon.

Do you have to make investments $1,000 in Waste Administration proper now?

Before you purchase inventory in Waste Administration, contemplate this:

The Motley Idiot Inventory Advisor analyst group simply recognized what they consider are the 10 greatest shares for traders to purchase now… and Waste Administration wasn’t considered one of them. The ten shares that made the minimize may produce monster returns within the coming years.

Think about when Netflix made this record on December 17, 2004… if you happen to invested $1,000 on the time of our advice, you’d have $649,037!* Or when Nvidia made this record on April 15, 2005… if you happen to invested $1,000 on the time of our advice, you’d have $1,086,028!*

Now, it’s price noting Inventory Advisor’s whole common return is 1,056% — a market-crushing outperformance in comparison with 188% for the S&P 500. Don’t miss out on the most recent high 10 record, accessible whenever you be part of Inventory Advisor.

See the ten shares »

*Inventory Advisor returns as of September 8, 2025

Daniel Sparks and his shoppers haven’t any place in any of the shares talked about. The Motley Idiot recommends Waste Administration. The Motley Idiot has a disclosure coverage.

The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.