SEATTLE — Boeing Co’s board raised the company dividend about 50% on Monday and approved $10 billion in new share buyback authority that the company said it would use in the next two to three years.
Reuters
The share repurchase represents about 10% of Boeing’s outstanding stock, ranking it in the middle of buybacks by large US companies, which are on a stock-buying spree this year.
Boeing shares rose about 2% in extended trading after the news. They closed at $134,72 on the New York Stock Exchange on Monday.
The increases in dividends and share repurchases “reflect sustained, strong operational performance by our businesses, increasing cash flow, and our confidence in the future,” Boeing Chief Executive Jim McNerney said in a statement.
The new repurchase amount adds to about $800 million remaining from the company’s 2007 stock repurchase authorisation and buying will begin in 2014, Boeing said. The quarterly dividend is 73 cents per share, up from 48,5 cents. Boeing is enjoying a surge in revenue and cash as it ramps up commercial jet production, with a target of delivering a record 635 to 645 aircraft this year. Those gains help offset declining US military spending, which is hampering Boeing’s defence businesses.
The company is also preparing to invest billions of dollars in two new models, the narrow-body 737 MAX and the wide-body 777X.
The increased payouts come as the company tries to clinch a labour contract with its unionised machinists that would ensure the 777X is built in the Seattle area.
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“Boeing is looking forward to a period of long-term financial stability made possible primarily by the men and women of District 751,” Tom Wroblewski, president of the International Association of Machinists, District 751, said.
“While other production sites have failed to hit their targets, we have delivered record numbers of airplanes at record profit margins this year, helping drive the stock price to record highs,” he added.
“Given this, I feel it’s wrong for the company to try to take away pension benefits that provide our members with their own future financial stability.”
For investors, the rise in returns “speaks to the belief that the company has line of sight to improving its operating performance,” Howard Rubel, an analyst at Jefferies & Co Inc, said.
The buyback amount matched his forecast, and the dividend was larger, he said.
Robert Stallard, an analyst at RBC Capital Markets, said the $10 billion repurchase over two or three years was below the $6,5 billion in repurchases he expected in 2014.
