For Immediate Release
Chicago, IL – September 27, 2010 – Zacks.com Analyst Blog features:McDonald Corp. (MCD), Yum! Brands Inc. (YUM), Brinker International Inc. (EAT), Petroleo Brasileiro S.A. (PBR) and BP plc (BP).
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Here are highlights from Friday’s Analyst Blog:
McDonald’s Hike Dividend
Oak Brook, Illinois-based McDonald Corp. (MCD)recently announced its decision to hike quarterly dividend by 6 cents to 61 cents per share. This translates into an 11.0% increase from the prior dividend. The increased dividend will be paid on December 15, 2010, to stockholders of record as on December 1, 2010. McDonald’s has a history of raising dividend every year since it paid first dividend in 1976 and brings the forward annual dividend yield as of September 23, 2010, to 3.27%. The new dividend yield of the company is approximately 75 bps more than a 10-year Treasury.
McDonald’s has further enhanced shareholder value by repurchasing 20.8 million shares of stock in the first half of 2010. The company expects to return $5 billion in cash to shareholders in 2010 via dividends and stock buybacks.
McDonald’s is the world’s largest chain of hamburger fast food, with more than 32,000 restaurants in over 100 countries and 80% of its restaurants are franchised. The company has a consistent track record of not only paying quarterly dividends but also provides a hike every year, supported by its cash position. Over the last five-year period, McDonald’s dividend has grown at a rate of 30.1%, a much faster pace than the industry average growth rate of 9.3%.
Last year in September, the company increased its dividend by 10% to 55 cents and also authorized a $10 billion share repurchase program. One of McDonald’s peers, Yum! Brands Inc. (YUM) also announced an increment of 19% in its dividend to 25 cents, last week.
Another peer of the company, Brinker International Inc. (EAT) increased its quarterly dividend by 27% to 14 cents per share on March 26, 2010, to boost shareholder value.
McDonald’s forward annualized dividend yield of 3.27% inched past the industry average of 1.55% as well as forward annualized dividend yields of 1.89% and 3.12% of Yum! Brands and Brinker, respectively.
McDonald’s is rich in cash and is armed with cash and cash equivalents of $1.7 billion as of June 30, 2010, further reiterating the fact that the company is in a strong cash position and has the ability to provide a sound value to its shareholders.
We appreciate the effort of McDonald’s to consistently enhance shareholder returns, even in times of an economic downturn. We believe that an increase in dividend payment affirms the company’s optimistic outlook and depicts that it is heading toward future growth.
Petrobras Share Sale Sets Record
Brazilian state-run energy giant Petroleo Brasileiro S.A. (PBR), or Petrobras S.A., raised R$120.4 billion ($70 billion) in the biggest global share issue in history. The stock offering saw the Brazilian government receive shares worth about $42.5 billion against the transfer of rights for up to 5 billion barrels of deep-sea pre-salt oil reserves (oil deposits located in the sea bed under thick layers of salt) to Petrobras.
According to a regulatory filing, the company sold 2.4 billion common shares (that carry voting rights) for R$29.65 each and priced 1.87 billion new preferred stocks at R$26.30 a piece. The deal represents a 2% discount to Petrobras’ Thursday’s closing price.
The Rio de Janeiro-based integrated major plans to use the multi-billion dollar capital infusion to help finance its ambitious 2010-2014 strategic plan, with projected investments of $224 billion during the five-year period. Petrobras will require huge capital expenditure to develop the deep pre-salt layers as part of the company’s strategic initiative to ramp up production from the current 2.5 million barrels of oil equivalent per day (MMBOE/d) to 3.9 MMBOE/d in 2014 and 5.4 MMBOE/d in 2020.
Following the share sale, the government will boost its stake in Petrobras, where it already controls more than 55% of the voting power. This has led to investor skepticism regarding heightened state interference in Latin America’s largest company by market value. Additionally, there is apprehension that the share sale would seriously dilute Petrobras’ earnings. Due to these concerns, the company’s stock price has slumped almost 30% this year – the second most worst performing oil major after the beleaguered British giant BP plc (BP).
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BP PLC (BP): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis Report
PETROBRAS-ADR C (PBR): Free Stock Analysis Report
YUM! BRANDS INC (YUM): Free Stock Analysis Report
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