McDonald's Corp. set a target Wednesday of returning as much as $20 billion in cash to investors through dividends and share buybacks by 2016, dashing optimism that the company would spend even more to help its stagnant shares.
The plan represents as much as a 20 percent increase from the amount of cash returned in 2011 through 2013, the Oak Brook, Ill.-based company said in a statement. McDonald's also said it plans to sell 1,500 company-owned stores to franchisees by 2016, primarily in Europe, the Middle East, Africa and its Asia-Pacific region.
McDonald's shares have languished as the company struggles to increase sales amid shaky consumer confidence and heightened competition from fast-food rivals. Chief Financial Officer Pete Bensen said in March that the company could be "more aggressive" in borrowing to fund buybacks and dividends.
"The magnitude here is not significant enough to really move the needle," Peter Saleh, an analyst at Telsey Advisory Group in New York, said in an interview. While the $18 billion to $20 billion in shareholder returns is "in line" with expectations, "it doesn't get anyone overly excited."
McDonald's shares fell $1.06 to close Wednesday at $101.30. The stock had gained 2.1 percent in the 12 months through Tuesday, compared with a 16 percent increase in the Standard & Poor's 500 Index.
U.S. corporations are starting to put some of their $2 trillion in cash and marketable securities to work, according to data compiled by Bloomberg on about 2,300 nonfinancial companies in the Russell 3000 stock index.
Announced corporate buying -- a combination of new cash takeovers and new stock buybacks -- rose to a five-month high of $80.5 billion in April, according to data from TrimTabs Investment Research Inc.
Business on 05/29/2014