Boeing announces $10 billion buyback, raises dividend

Tags: Boeing, Companies
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.

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 authorization, 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 defense 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 labor contract with its unionized machinists that would ensure the 777X is built in the Seattle area. The 31,000 local union members have rejected Boeing's offer, largely because it would switch their defined-benefit pension to a 401(k)-style plan.

The International Association of Machinists declined to offer immediate comment on the dividend and repurchase news.

For investors, the rise in returns "speaks to the belief that the company has line of sight to improving its operating performance," said Howard Rubel, an analyst at Jefferies & Co. Inc. 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.

"So although this news will probably be welcome, the impact on consensus EPS estimates may not be as positive as expected," Stallard added in a note to clients.

US companies in the Standard and Poors 500 authorized nearly $123 billion in buybacks in the second quarter, the most since the third quarter of 2011, according to FactSet Research Systems Inc .

Among Dow Industrial Average companies, Boeing's $10 billion repurchase was in line with General Electric Co , Pfizer Inc , Intel Corp and Goldman Sachs Group Inc . But was far smaller than $40 billion for Microsoft Corp and $17 billion for Home Depot Inc.

But among peer companies authorizing buybacks of $10 billion or more, Home Depot is giving shareholders a much larger boost. It is buying back 15% of its outstanding shares. In comparison, GE's $10 billion buyback will purchase just 4% of outstanding shares.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • The economic survey falls in step with the BJP’s election manifesto

    It’s always tough to find something wrong with the annual economic survey as it only articulates the government’s desire to set its house in order

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Nigavekar

Why higher education needs innovation

India is such a great country that it creates complexity ...

Zehra Naqvi

We must overcome the fear of death

It is the biggest irony that the only thing that’s ...

Dharmendra Khandal

Jawai leopards and locals can coexist peacefully

At first glance, the Jawai landscape seems like a large ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture