Dow Snaps Win Streak; $18 Billion Can't Satisfy McDonald's Shareholders

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) broke a four-day winning streak Wednesday, as 19 of its 30 components lost ground. Leading the blue chips lower was McDonald's (NYSE: MCD  ) , which finished as a standout underperformer as investors lamented the company's plans to return capital to shareholders. At the ring of the closing bell, the Dow was off 42 points, or 0.3%, ending at 16,633.

You'd think that any time a company unveils a plan to return between $18 billion and $20 billion to the pockets of its investors, the underlying stock would skyrocket. Today would have proven you wrong: McDonald's announced just such a plan at an investor conference on Wednesday, and shares promptly lost 1% in response. CEO Don Thompson said the capital would be returned in the form of dividends and stock buybacks through 2016, as McDonald's raises quick cash by converting company-owned restaurants to franchised locations. The company, worth $100 billion by Wall Street's best guess, already pays shareholders a 3.2% annual dividend, so increasing it further implies the company has run out of ideas to maximize shareholder value.

Another mammoth in its respective industry, United Continental  (NYSE: UAL  ) , soared 3.2% on Wednesday, bucking the markets' broader negative trends. United Continental's peers also ignored the selling in the stock market today, as airline stocks tacked on 1.5% as a group. United Continental stock, however, managed to outperform its peers due to a little help from regulators. (You read that right... I said help from its regulators.) The U.S. Federal Aviation Administration gave American carriers a thumbs-up to fly the newer Boeing 787 model with fewer restrictions, allowing airlines to use the planes for a much wider range of routes and international destinations. United Airlines is the only U.S. airline currently flying the 787, so it will reap the rewards sooner.

Shutterfly: Phenomenal business. Risky stock. Image source: Company website

Elsewhere in the consumer-services sector, you won't find Shutterfly (NASDAQ: SFLY  ) hawking burgers or flying people through the air. Instead, the company specializes in the relatively new business of printing your digital photos in a variety of custom fashions. An innovator in its field, annual sales more than tripled from 2009 to 2013, as demand for personalized calendars, greeting cards, and photo books took off. Shutterfly's stock price has responded in kind, nearly tripling in the last five years, as well. I must echo my colleague Sean O'Reilly's sentiments, however, warning that the stock's current valuation isn't overly compelling. Shares shed 0.5% in trading today.

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John Divine

Fool since 2012, unique fingerprints since birth. Age 7: Put lifetime savings ($18.37!) in the bank, became disillusioned with low interest, and a fascination with the stock market was born.

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Related Tickers

8/31/2015 4:57 PM
^DJI $16528.03 Down -114.98 -0.69%
MCD $95.02 Down -1.23 -1.28%
McDonald's CAPS Rating: ***
SFLY $38.86 Down -0.47 -1.20%
Shutterfly, Inc. CAPS Rating: *
UAL $56.97 Down -0.15 -0.26%
United Continental… CAPS Rating: **