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Understanding McDonald's: Comprehensive company primer and profitability analysis

Part 19
Understanding McDonald's: Comprehensive company primer and profitability analysis (Part 19 of 20)

What is driving share repurchases and dividends at McDonald’s?

For the last three years, the company has returned a total of $16.5 billion to shareholders through a combination of share repurchases and dividends. In September 2009, the company’s Board of Directors approved a $10 billion share repurchase program with no specified expiration date (“2009 Program”). As most of the amount authorized under the 2009 Program was used, the company’s Board of Directors terminated the 2009 Program and replaced it with a new share repurchase program, effective August 1, 2012, that authorizes the purchase of up to $10 billion of the company’s outstanding common stock with no specified expiration date. In 2012, approximately 8.4 million shares were repurchased for $748 million under the new program.

The company has paid dividends on its common stock for 37 consecutive years and has increased the dividend amount every year. The 2012 full-year dividend of $2.87 per share reflects the quarterly dividend paid for each of the first three quarters of $0.70 per share, with an increase to $0.77 per share paid in the fourth quarter. This 10% increase in the quarterly dividend equates to a $3.08-per-share annual dividend and reflects the company’s confidence in the ongoing strength and reliability of its cash flow. As in the past, future dividend amounts will be considered after reviewing profitability expectations and financing needs and will be declared at the discretion of the company’s Board of Directors.

share repurchasesEnlarge Graph

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