Boeing Co's board raised the company dividend about 50% on Monday and approved $10bn in new share buyback authority that the company said it would use in the next two to three years Boeing Co's board raised the company dividend about 50% on Monday and approved $10bn in new share buyback authority that the company said it would use in the next two to three years. The share repurchase represents about 10% of Boeing's outstanding stock, ranking it in the middle of buybacks by large US companies, which are on a stock-buying spree this year. The increases in dividends and share repurchases "reflect sustained, strong operational performance by our businesses, increasing cash flow, and our confidence in the future," Boeing chief executive Jim McNerney said in a statement. The new repurchase amount adds to about $800mn remaining from the company's 2007 stock repurchase authorisation, and buying will begin in 2014, Boeing said. The quarterly dividend is 73 cents per share, up from 48.5 cents . Boeing is enjoying a surge in revenue and cash as it ramps up commercial jet production, with a target of delivering a record 635 to 645 aircraft this year. Those gains help offset declining US military spending, which is hampering Boeing's defence businesses. The company is also preparing to investbns of dollars in two new models, the narrow-body 737 MAX and the wide-body 777X. The increased payouts come as the company tries to clinch a labor contract with its unionised machinists that would ensure the 777X is built in the Seattle area. The 31,000 local union members have rejected Boeing's offer, largely because it would switch their defined-benefit pension to a 401(k)-style plan. " Boeing is looking forward to a period of long-term financial stability made possible primarily by the men and women of District 751 ," said Tom Wroblewski , president of the International Association of Machinists , District 751 , which represents the Seattle -area workers. "While other production sites have failed to hit their targets, we have delivered record numbers of airplanes at record profit margins this year, helping drive the stock price to record highs," he added. "Given this, I feel it's wrong for the company to try to take away pension benefits that provide our members with their own future financial stability." For investors, the rise in returns "speaks to the belief that the company has line of sight to improving its operating performance," said Howard Rubel , an analyst at Jefferies & Co. The buyback amount matched his forecast, and the dividend was larger, he said. Robert Stallard , an analyst at RBC Capital Markets , said the $10bn repurchase over two or three years was below the $6.5bn in repurchases he expected in 2014. "So although this news will probably be welcome, the impact on consensus EPS estimates may not be as positive as expected," Stallard added in a note to clients. US companies in the Standard and Poor's 500 authorised nearly $123bn in buybacks in the second quarter, the most since the third quarter of 2011, according to FactSet Research Systems. Among Dow Industrial Average companies, Boeing's $10bn repurchase was in line with General Electric Co , Pfizer, Intel Corp and Goldman Sachs Group . But was far smaller than $40bn for Microsoft Corp and $17bn for Home Depot .
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