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?

On Friday, Domino’s Pizza Inc (DPZ) announced that David Mounts was going to be replacing Mike Soignet, starting September 17^th. Mike Soignet, who is vice president of distribution and procurement, has been with Domino’s over twenty years, will officially retire in October.

As of yet, there hasn’t been a replacement found for David Mounts, who is the current chief financial officer. Mounts was chosen for the promotion largely in part to his experience in the supply chain division at UPS Inc. Until a replacement for Mounts can be found, Bill Kapp will be standing in as acting chief financial officer. David Brandon, President and Chief Executive, is currently working to extend and renew his own employment contract. Everyone is certain that this transition will be finalized before the beginning of November.
In other Domino’s Pizza news, a new position has been created and filled, starting September 17^th. The company has announced that the naming of Patrick Doyle as president of the United States division.

So, no matter how you like your pizza: ultimate deep dish, classic hand tossed, Brooklyn style, or crunchy thin crust, you will be happy to know that, thanks to the recent changes in Domino’s Pizza, the stock closed at +.13 on September 14^th. No matter who is running Domino’s, you can be sure that your pizza will continue to be delivered hot and fresh in thirty minutes or less.

Yesterday, on my way to work, I dropped by one of nearby McCafes, and ordered one of those latte coffees everybody is talking about. I actually never went to McCafe before, so I was very curious about the taste of their new coffee. And I was very pleased, really. It costs less than Starbucks, which is somewhat expensive, if you ask me.

The whole event inspired me to take a closer look to the story behind the curtains and new McDonald’s development strategy.
There was an upscale sale of coffee products during the August, which were probably the inducement for September’s raise in the price of shares (MCD). MCD was pushed up for 3.2% on September 11, and reached $51.76, with new 52-week high of $53.55 during trading session.

I also noticed another thing: there was a huge raise in regular coffee sales through August, as far as 19%, and even bigger raise in the total sales of coffee (including coffee specialties, like lattes and cappuccinos) which peaked to 37% in July. Do you see any connection with McDonald’s introduction of its premium drip coffee last year?

As I see it, a great potential for McDonald’s is just to be widely uncovered in this niche. Of 21 McCafe in the United States, 10 were opened this year. There was an S&P’s research note, which said that further growth is to be expected, especially in Europe where it could reach even 15%, or slightly more than 10% in Asia-Pacific-Middle-East-Africa region.

Some restaurant industry analysts think that many people are switching from dining rooms, that are more expensive, to fast-food restaurants with good service and price policy, which, even if it is just a trend continuation, could be one more positive feedback for McDonald’s shares.

Considering that European McCafes are in their second year of expansion, there will definitely be another profit increase.
By connecting all the dots in the chain of events within McDonald’s business strategy, earnings are expected to raise, profits also, and therefore it seems like a good investing opportunity, even for risk-averse investors.

Definitely take a deeper look at McDonald’s as a possible investment opportunity this year. November through April is usually when stocks perform the best.

Save to del.icio.us • Digg This! • Share on Facebook! • Stumble it! • Submit to Propeller
Subscribe to Blog Feed • Signup for Newsletter