Wednesday, May 28, 2014

McDonald's In Massive Capital Giveback

I predicted, back in 2009, that companies would shrink - via buybacks and dividends - rather than invest and grow aggressively because of the tenor, tone, and actions of the Obama administration and the Pelosicrats in Congress.
As a grace note to all this, let me point out that many large companies, Cisco and IBM for example, have announced large increases in their stock buyback programs to the tune of billions of dollars.  This means that there is a higher return to shrinking their capital base than to expanding and hiring.  That is the heart of the structural problem that Washington and Obama have created.  Until that reverses, we won't see any meaningful job creation.
I've chronicled this prediction along the way too.

Now, six years in, we still have corporations that see no compelling prospects to the point that they'd rather shrink than grow and invest.
McDonald's on Wednesday said it plans to return $18 billion to $20 billion to shareholders between 2014 and 2016 through a combination of dividends and share repurchases.
More cash in the pockets of shareholders.  (And this from a company with a black CEO that overwhelmingly caters to minorities and poorer people.  Not fitting the narrative.)


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