LOS ANGELES – McDonald's Corp. (MCD) Tuesday raised its annual dividend 38 percent, a move the world's largest restaurant chain said is another sign of its revitalization.
The Oak Brook, Ill. company said its board of directors boosted the yearly payout to 55 cents per share from 40 cents per share. The increase is the second-biggest since 1980, the company said in a statement.
The company's shares, which had been down modestly earlier in the session, rose nearly 2 percent following the announcement.
Last year, McDonald's raised its dividend by 70 percent, the largest increase in 25 years, as part of a move to improve shareholder returns.
Prudential (search) restaurant analyst Larry Miller said in a note to clients the increase was larger than he had expected, and added that "future dividend increases could be more modest than the past two."
The renewed focus on shareholder returns is part of McDonald's 17-month-old turnaround plan that includes scaling back expansion and channeling efforts into the company's existing 30,000 hamburger restaurants.
The plan, which has also included an overhaul of the McDonald's menu and restaurant operations, has succeeded in lifting worldwide sales and profits for over a year.
As a result, the company will return over $1.2 billion to shareholders through share buybacks and dividends this year. The common stock dividend accounts for nearly $690 million of that total, McDonald's said.
The burger chain will also invest up to $1.6 billion in capital spending this year and pay down between $600 million and $700 million in debt.
The dividend is payable Dec. 1 to shareholders of record as of Nov. 15.
McDonald's shares were up 48 cents, or 1.8 percent, to $27.65 on the New York Stock Exchange (search).