McDonald's Is Giving Investors a 20% Raise

Management can't seem to deliver strong sales growth lately, but they can send billions back to shareholders in the form of dividends and stock buybacks.

Jul 24, 2014 at 6:44PM

McDonald's (NYSE:MCD) just posted some bleak second-quarter earnings results. Revenue and profits both missed expectations, and customer traffic fell in each of the major markets around the world. But there was at least one metric in the report that pointed higher for investors: cash returns to shareholders.

Mcd Logo

In the video below, Fool contributor Demitrios Kalogeropoulos discusses the restaurant chain's plans to send as much as $20 billion back to investors through 2016, or 20% more than the prior three-year period. However, with profit growth slipping, investors might wonder how the fast food giant can fund such a spending boost.

It won't come from shortchanging business investments, Demitrios notes, which is good news for long-term shareholders. Instead, McDonald's will be: 1) tapping into its growing operating cash flow; 2) taking on some new debt; and 3) refranchising as many as 1,500 company-owned locations to raise the extra cash. Watch the video for Demitrios' full take.

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Demitrios Kalogeropoulos owns shares of McDonald's. The Motley Fool recommends McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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