Would you like some cash with that burger? McDonald’s (MCD) announced recently that the company will be increasing its dividends by 50%, and, between 2007 and 2009, would be returning between $15 and $17 million in US currency to shareholders.
This increase in dividends represents a 3% yield and far exceeds the 25% estimate that the market had priced and his own 30% estimate. As a result of this increase in yield, the stock climbed over 6% and the day closed at $54.30.

Stephen Kron said that the money that will be returned to shareholders will come from several different sources, including cash flow that is expected to be strong from operations, current cash balances, options exercising will yield some cash, and there will be a debt increase, but only a modest one of $3 billion. There is no reason why anyone should think that the extra debt will affect the single-A rating of the company.

So if you are a shareholder in McDonald’s, the next time you go in there you can think about the wonderful return that you are getting from your investment, and enjoy your Big Mac, Coke and fries with a handful of cash on the side. What a way to end your meal! Much nicer than an apple pie or a McFlurry any day, huh?