US aerospace giant Boeing has unveiled a record $10 billion (£6.1 billion) share buyback and 50 per cent hike in the dividend.
Despite a succession of glitches with its Dreamliner aircraft, chairman and chief executive Jim McNerney said the moves reflected its operational performance, increasing cash flow and confidence in the future.
Boeing is enjoying a surge in revenue and cash as it ramps up commercial jet production, with a target of delivering a record of between 635 and 645 aircraft this year.
Those gains help offset declining US military spending, which is hampering Boeing’s defence businesses.
The share purchase continues the trend among major corporates this year, with firms including Pfizer, Cisco and AT&T together buying back more than $100 billion in stock between April and June this year.
Microsoft and Home Depot launched buybacks of $40 billion and $17 billion respectively. The move boosts share prices — and the earnings per share measure used to assess bosses’ pay packets — although returning the cash does not necessarily augur well for companies’ assessment of growth and investment intentions.
The increase in the share buyback programme is in addition to the $800 million available in Boeing’s current stock repurchase programme.
The firm says it will resume buying back stock in January. Jefferies analyst Howard Rubel said the higher returns “speak to the belief that the company has line of sight to improving its operating performance”.