Hamburger chain McDonald’s raises quarterly dividend by 11 percent to 61 cents

Thursday, September 23, 2010

McDonald’s boosts quarterly dividend by 11 percent

OAK BROOK, Ill. — McDonald’s Corp. is boosting its quarterly dividend by 11 percent to 61 cents, and analysts expect the world’s biggest hamburger chain to continue returning cash to shareholders while still investing in its restaurants.

The chain, based in Oak Brook, Ill., has been generating increased profits and revenue in the economic downturn by catering to frugal shoppers and coming out with new products such as smoothies to keep them interested.

McDonald’s has raised its dividend every year since its first dividend was paid in 1976.

The company said Thursday that the quarterly dividend payout of approximately $650 million will be paid on Dec. 15 to shareholders of record on Dec. 1.

CEO Jim Skinner said in a statement that about $5 billion in total cash will be returned to stockholders in 2010, split between dividends and buybacks.

This implies that the company will buy back $1.2 billion worth of shares in the second half of the year, said Baird analyst David Tarantino. He told clients in a note that since 2007, the burger chain has returned more than $19 billion in cash to shareholders, including $5.1 billion last year.

He rates the stock “Outperform” with an $80 price target.

Shares of McDonald’s fell 49 cents to $74.64 Thursday.

Earlier this month, McDonald’s said that a key U.S. revenue figure climbed 4.6 percent in August as customers visited its restaurants for frappes and fruit smoothies.

The chain said that August revenue at restaurants worldwide that were open at least 13 months rose an even faster 4.9 percent.

That type of comparison is important for restaurant operators because it tracks growth at existing locations while excluding those at stores that open or close during the year.

McDonald’s focus on value through its $1 menu has helped the company outpace competitors, including Burger King Corp. and Wendy’s/Arby’s Group Inc. in the weak economy. Shoppers are limiting their meals out in restaurants and increasingly focusing on price when they do venture out.

McDonald’s said it plans to report its third-quarter results on Oct. 21. The company has more than 32,000 restaurants in more than 100 countries.

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