If you're at or near retirement, your portfolio is likely tilted toward traditional income sources like bonds and CDs. Sure, these investments yield significantly below what you can get from the stock market. But they offer predictability and safety in return.

There aren't many companies whose shares can intelligently fit within a risk-averse, income-focused portfolio. But McDonald's (NYSE:MCD) stock has all the right characteristics to do just that.

Friends eating at a fast food restaurant.

Image source: Getty Images.

An adaptable business

You'd have to go back to 1976 to find the last time that the fast-food giant didn't reward shareholders with an increase in its annual dividend payment (currently yielding 2.4%). In the four decades since then, its industry has endured many recessions along with the rise and fall of new competitors and disruptive business models.

Mickey D's hasn't always stayed ahead of these changes, but it has demonstrated an incredible knack for adapting to them. The recent casual dining craze is a great example. McDonald's spent the last two years ceding market share to rivals that stressed natural ingredients and restaurant-quality preparation methods.

The company is back on the offense now, though, having just logged its strongest growth pace in over five years after reworking its menu and investing heavily in store remodels. That recovery is yet more evidence that McDonald's enjoys terrific brand power and a persistent resonance with consumers around the world.

With rock-solid finances

McDonald's has one of the most profitable businesses around, not just within its industry, but across the entire stock market. Even through the rough sales patch of the past few years, it consistently generated enough operating cash to easily double its annual dividend commitment. Return on invested capital is above 20%, too, which currently ranks the business in fifth place out the 30 members of the Dow.

MCD Operating Margin (TTM) Chart

MCD Operating Margin (TTM) data by YCharts

The chain is set to get even more profitable as management executes its refranchising plan that will lower the percentage of company-owned restaurants to 5% from the 15% it operated at the end of 2016. Investors are already getting a taste of the effect that will have on McDonald's finances by seeing it push revenue lower while lifting earnings. Over the last six months, sales dipped 3%, while operating income soared 21% higher to $3.6 billion .

And a bright outlook

Management's long-term plan calls for profitability to keep rising over the next two years to hit the mid-40% range beginning in 2019, up from about 35% today. Earnings are projected to rise by a bit less than 10% each year over that time, which would provide ample room for healthy dividend increases.

McDonald's is aiming to build on its positive operating momentum through additional menu upgrades. It also plans to pour some of its ample cash flow into modernizing its locations with digital conveniences -- like ordering kiosks -- that will improve the customer shopping experience.

Over the longer term, it is attacking a home delivery opportunity that could be massive given that nearly 75% of the population in its biggest markets lives within three miles of a McDonald's location. It's ironic that the company that convinced people to eat fast food on the go through drive-thru locations might be the one that most disrupts that model with home delivery. But it shows the type of market leadership and flexibility required to fund a dividend that's (almost) certain to keep rising.

Demitrios Kalogeropoulos owns shares of McDonald's. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.