Multinational airplane manufacturer, Boeing Co has announced on Monday that it would raise its quarterly dividend by 20 percent. Company directors have also said they would replace its $14 billion buyback programme with a new $18 billion authorization.
The 20 percent raise of Boeing dividend will bring $1.71 a share, a move that has surpassed analyst expectations. Boeing’s shares have been the best performing component of the Dow Jones Industrial Average index, and have enjoyed an 84 percent surge. They were up 1.3 percent at $286.90 in after-market trading. The gain has put Boeing in front of tech giants Apple Inc. and Caterpillar Inc.
According to the company, the decision was not based on the recent Republican tax reform, which will cut corporate taxes from 35 percent to 20 percent.
The jet maker is riding a wave of good fortune recently, after having increased factory output to profit from a record order backlog. This, in turn, has allowed them to steer clear of the pitfalls which have affected other companies such as General Electric Co.
The move comes after Boeing’s biggest airline investment since the 787 Dreamliner which debuted over ten years ago. Boeing’s new aircraft, a two-jet family dubbed 797, has been carefully timed with the dividend rise so that development costs for upgrading existing models will be reduced.
The aircraft company expects to generate $12.5 billion in 2017 as it accelerates manufacturing of its existing single-aisle 737. Boeing has raised its quarterly dividend by 250 percent in the past five years, with the new dividend being payable starting with March 2, 2018, to company shareholders.
The new $18 billion authorization is the largest repurchase program in Boeing’s history.They also claim that they have repurchased $9.2 billion worth of shares in 2017 from the $14 billion buyback programme which was approved in December last year.
According to Greg Smith, who is the Chief Financial Officer of Boeing, the quarterly dividend raise shows the company’s confidence in their financial strength and long-term outlook of their business.
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