Aerospace giant Boeing Co. BA boosted its quarterly dividend by 20% and raised its stock-repurchase plan to $14 billion to let investors share certain benefits of soaring airliner deliveries. Shares of Boeing gained more than 1% after the announcement on Dec 14 and 10.02% so far this year.
Boeing’s quarterly dividend payout increased to $1.09 per share from 91 cents paid earlier. The company will pay the raised dividend on Mar 4, to stockholders on record as of Feb 12, 2016.
The company also said that it has finished its stock repurchases for 2015. The company has spent $6.75 billion out of the original $12 billion authorization announced last December and has currently $5.25 billion left. Notably, the latest increase takes the approved total to $14 billion.
The raised dividend and higher buyback authorization indicate Boeing’s confidence in the commercial market, which that is expected to continue registering favorable environment. The moves may win investors’ trust in the face of concerns that sales in 2015 will likely fall short of factory output. The company received only 575 orders through Dec 8 compared with projected deliveries of 755 to 760 commercial jets.
The U.S. aerospace behemoth reported strong delivery numbers for the first nine months of 2015 on the back of continued growth of its 787 Dreamliner and Next Generation 737 single-aisle jetliners, thereby beating archrival, Airbus Group. Total commercial airplane deliveries were 580 during this period, while 737 jet deliveries were 375.
Notably, defense companies have been particularly active in recent years. This is partially due to tailwinds associated with pension regulations that have lowered their funding commitments.
However, Pentagon has criticized the spree of buyback activity among defense companies as it is of the opinion that the companies should direct more funds toward internal research and development. Nevertheless, companies have expressed that the Defense Department needs to be clearer about the extra funding and perk up incentives to bolster investment.
Earlier this month, General Dynamics Corp. GD announced that its Board of Directors has authorized the repurchase of an additional 10 million shares of the company’s issued and outstanding common stock in the open market.
Northrop Grumman Corp. NOC and Lockheed Martin Corp. LMT have also boosted their buyback activity. Northrop repurchased a quarter of its shares over the past three years. In Sep 2015, it secured authorization to buy back another $4 billion in stock.
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