Aircraft manufacturer Boeing Co. is giving more treats to investors on Tuesday, as it raises dividend and replaces its current share buyback program.
Boeing said that the dividend increase and the new repurchasing program were not associated with the US Senate’s tax overhaul, which aims to slash corporate taxes from 35 percent to 20 percent.
Other businesses in the US are planning to use the additional benefit from the tax overhaul to buy back shares, solve debt, and other shareholder-related moves.
Boeing Raises Quarterly Dividend
The world’s largest maker of jetliners stated that it would increase its quarterly dividend by 20 percent from its previous $1.42 to $1.71 per share.
Boeing’s chief financial officer Greg Smith said that the cash deployment plans showed the ongoing confidence in their financial strength and the long-term outlook of their business.
Over the past five years, Boeing has expanded its quarterly dividend beyond 250 percent. The new dividend is due for payment on March 2 next year to shareholders of record as of February 9, 2018.
Boeing Replaces Share Buybacks Program
Boeing’s board of directors has also approved to change last year’s $14 billion share buybacks program, under which the company repurchased $9.2 billion this year, to $18 billion. This is so far the largest in company history.
Analyst Peter Arment stated that the boost in the buyback amount showed the Illinois-based plane maker’s confidence in generating strong free cash flows over the next few years.
Data provided by a financial software group showed that ever since Boeing started its buyback spree in 2013, it has spent more than $30 billion on its shares, while its outstanding basic stock has dropped 20 percent.
The company expects to accomplish the new buybacks over the next 24 to 30 months.
Boeing’s shares gained 1.3 percent to $286.93 in the after-hour trade on Tuesday. It already has surpassed smartphone maker Apple Inc. and construction equipments manufacturer Caterpillar Inc. by 84 percent this year, the biggest leap in the Dow 30.
Boeing’s Aircraft Investment
Boeing’s chief executive Dennis Muilenburg seems to be doing well on carrying out a promise to return cash gains to shareholders, seeing that its carbon fiber 787 Dreamliner has become a moneymaker during the previous year.
The aircraft manufacturing group is also speeding up its factor output, as it makes an effort to benefit from a record order backlog, which could reduce recurring market swings that have hurt other major industrial companies.
The plan is closing in on its biggest test yet as a significant potential investment approaches. Boeing directors are assessing whether to go on with their first all-new jetliner, the 797.
Deliberation over the model would be vigilantly timed so that building costs increase as spending narrows on upgrades of current models.
Aerospace analyst Richard Aboulafia said that development expenses for the proposed two-jet family plane would most likely cost between $10 billion and $15 billion.
Boeing expects to bring in $12.5 billion in cash this year, as it speeds up output of the 737 aircraft, its major source of income, and as its first 777X starts development.
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