Bloomberg News

McDonald's Boosts Dividend

September 25, 2008

McDonald's Corp. (MCD:US), the world's largest restaurant company, increased its annual dividend by 33 percent as part of a plan to return as much as $17 billion to shareholders through 2009.

The company will pay the $2-a-share annual dividend to shareholders after boosting sales, profit and cash from operations. The quarterly payout of 50 cents to investors who owned the stock on Dec. 1 amounts to more than $550 million, Oak Brook, Illinois-based McDonald's said today in a statement.

McDonald's, led by Chief Executive Officer Jim Skinner, focused on new chicken sandwiches, breakfast foods and coffees to boost revenue by 9.1 percent in 2007, the biggest increase in three years. The fast-food chain said it returned $5.1 billion so far this year and $5.7 billion in 2007 to shareholders through dividends and share buybacks (MCD:US).

``It shows management's confidence that the strong performance will continue,'' Giri Cherukuri, who helps manage $1.4 billion at Oakbrook Investments LLC. The Lisle, Illinois- based firm owns 279,566 McDonald's shares.

The dividend increase was more than the 20 percent to 25 percent that Morgan Stanley analyst John Glass estimated in a Sept. 9 note to clients. The dividend is payable Dec. 15.

Sale Boosts Cash

The restaurant company increased cash from operations by 17 percent to $1.26 billion in the second quarter from a year earlier, according to a securities filing. The sale of McDonald's stake in U.K-based sandwich chain Pret A Manger to buyout firm Bridgeport Capital Ltd. generated proceeds of $229.4 million in the second quarter, the filing showed.

Global sales at restaurants open at least 13 months climbed 8.5 percent in August from a year earlier, helped by an almost 12 percent gain in Europe and the dollar's decline against other currencies, McDonald's said Sept. 9.

August same-store sales in the U.S. advanced 4.5 percent after almost a third of domestic restaurants sold large sodas and sweet iced tea for $1, part of the chain's emphasis on discounts that's also drawing customers overseas.

McDonald's rose 84 cents, or 1.4 percent, to $62.27 at 4:02 p.m. in New York Stock Exchange composite trading (MCD:US). The shares have advanced 5.7 percent this year, the best performer among the five members of the Standard & Poor's 500 Restaurants Index.

A year earlier, McDonald's increased the annual dividend 50 percent, after raising it by 49 percent and 22 percent the previous two years.

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net.

To contact the editor responsible for this story: Michael Nol at mnol@bloomberg.net.


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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $93.53 USD
    • -0.22
    • -0.24%
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