McDonald's ( MCD ) has cooked up some plans on the corporate front to free up cash and offer tastier dividends to shareholders.
The fast-food king last week announced plans to return money to shareholders and expand franchising over the next two years. CEO Don Thompson said at an investor conference May 28 that McDonald's will return $18 billion to $20 billion to shareholders through 2016, via dividends and stock buyback programs.
The Oak Brook, Ill.-based burger chain also plans to franchise out at least 1,500 company-owned restaurants during the same time frame. That would be a 50% pickup in franchising activity from the past three years.
Shareholders might find the news appetizing, but fast-food workers have been staging protests in the U.S. and abroad seeking a pay hike to $15 per hour and the right to unionize. Seattle on Monday became the first U.S. city to approve raising the hourly minimum wage to $15 by 2017-21, though allowing a lower wage for trainees.
For shareholders, McDonald's currently pays a quarterly dividend of 81 cents a share, or $3.24 on an annualized basis, for a 3.2% yield vs. the S&P 500's 1.88%. It's a member of the elite S&P 500 Dividend Aristocrats index, made up of companies that have boosted their annual payouts for the past 25 years.
Its three-year Earnings Stability Factor of 2 on a scale of 0 (most stable) to 99 (most volatile) underscores its 11-year track record of steady profit growth. Analysts expect a 4% gain this year and 9% the next.
The stock has been shaping a saucer base since April 2013 and appears to have formed a handle with a 103.88 buy point, slightly above the left-side high of 103.70.
Up weeks in above-average trade have outpaced heavy-volume down weeks the past few months, a sign of institutional buying.