It's an interesting move, since even the most successful of market debuts for Chipotle is unlikely to make a dent in the value of McDonald's shares, given its empire of more than 30,000 global restaurants. However, no good deed goes uncopied. If the IPO is a hit, you can expect Wendy's
The fast-casual Tex-Mex niche is certainly crowded. Chipotle, Baja Fresh, and La Salsa tend to diners who are looking to upgrade from Yum! Brands'
The burrito haven's rapid expansion may explain why McDonald's plans to take a small chunk of Chipotle public, rather than spin off its Boston Market chain. Chipotle started out the year with 410 units, with plans to tack on another 100 locations this year. Besides, some investors are still smarting over the last time that Boston Market, then known as Boston Chicken, went public.
Laying a little Chipotle sauce on us isn't the only item on McDonald's to-do list. It will also be dishing out some leafy greens to shareholders, hiking its dividend by 22%. This marks the 29th consecutive year of higher dividends at McDonald's, something that Motley Fool Income Investor subscribers might find even tastier than a saucy McRib sandwich.
The company is comfortable with the higher payout because it sees its annual growth rate coming in between 3% and 5%, with operating profits growing slightly faster. Heartened by healthy comps and cash flow generation, the company will also continue to repurchase its shares in the open market. Ronald McDonald is putting his money where his painted mouth is -- not a bad thing to do when you're the world's largest restaurant chain.
Hungry for stocks with delicious dividends and truly tasty growth potential? Motley Fool Income Investor is overstuffed with good advice. Sign up today for a free 30-day trial subscription. (Chips and guacamole not included.)Longtime Fool contributor Rick Munarriz enjoys those healthy Apple Dipper slices at McDonald's -- but only because they come with those caramel dipping sauce cups. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.