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Yum! Brands Inc. (YUM - Analyst Report), the world’s largest restaurant company, recently announced the approval of a share repurchase program of up to $1 billion of its common stock, through May 31, 2014. Over the years, this restaurant operator has been consistently enhancing shareholder return.

This $1 billion approval is in addition to the existing $236 million shares available for repurchase at the end of May 2013. In the recently reported quarter, the fast food company repurchased 6.5 million shares worth $414 million under the share repurchase program of $750 million, authorized in November 2011.

Furthermore, management announced a dividend of 33.5 cents per share to be paid on February 1, 2013 to shareholders of record as on January 11, 2013. The company has been aiming to achieve an annual dividend payout ratio of 35–40% and thus has been increasing its dividend every year since the program was initiated in 2004. During the last five-year period, Yum! Brands’ dividend has grown at a rate of 19.9%, much faster than the industry average of 4.8%.

The owner of KFC, Pizza Hut and Taco Bell, intends to enhance shareholders’ value and return cash to shareholders through share repurchases or dividends. Since 2004, the company has returned over $2.5 billion and $7.4 billion via dividend and share repurchase programs, respectively.

Moreover, with cash and cash equivalents of $942.0 million as of September 8, 2012, the company is in a strong position to reward its shareholders.

One of its competitors, McDonald’s Corporation (MCD - Analyst Report), has also been consistently enhancing shareholders’ returns. In the third quarter of 2012, McDonald’s returned $1.3 billion to its shareholders through share repurchases and dividend payments.  In 2012, the company expects to return $5.5 billion through share repurchases and dividend payment to shareholders. It’s another peer, Starbucks Corporation (SBUX - Analyst Report), also recently announced that its board of directors has authorized the repurchase of up to 25 million of its common stock.

We appreciate Yum! Brands’ concerted efforts to consistently boost long-term shareholders’ value, even during an economic downturn. The company has one of the highest returns on invested capital in the Quick Service Restaurants industry. We believe that the increase in share buy back authorization affirms the company’s optimistic outlook and shows that it is heading toward strong growth.

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