Boeing Co increases company dividend, authorizes $10 billion share repurchase

By Nicel Jane Avellana

Dec 17, 2013 03:25 AM EST

The board of directors of Boeing Co increased the company dividend by around 50% and authorized a new share buyback amounting to $10 billion, Reuters reported. The share repurchase, which the aircraft manufacturer said it would use in the next two to three years, represents an estimated 10% of its outstanding stock. The report said it ranks in the middle of share repurchases among large US firms that went on a stock-buying spree in 2013.

The report quoted Boeing Chief Executive Officer Jim McNerney, who said in a statement that both moves were a reflection of the business' sustained and strong operational performance as well as its increasing cash flow. It also reflected the company's confidence in the future, McNerney added.

Boeing said the new repurchase amount will add to the $800 million remaining from the firm's stock repurchase authorization in 2007. Buying will commence next year. From $0.485 cents a share, the quarterly dividend rose to $0.73 cents per share.

The report said Boeing is experiencing a revenue and cash surge as it increases its production of commercial jets, targeting a delivery record ranging from 635 to 645 planes for 2013. The gains in commercial jet production have helped offset the decline felt in Boeing's defense business as the US cuts military spending, the report said.

Jefferies & Co Inc Analyst Howard Rubel told Reuters that the increase in returns is proof that the company is intent on improving its operating performance. He gave a forecast and said the same repurchase amount and the dividend given by the firm was larger than what he expected, the report said.

However, RBC Capital Markets Analyst Robert Stallard said the $10 billion share buyback in two to three years was under the repurchases of $6.5 billion he expected for next year. The report quoted his note to clients, which read, "So although this news will probably be welcome, the impact on consensus EPS estimates may not be as positive as expected."

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