Boeing Boosts Dividend, Resumes Buyback - Analyst Blog


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The aerospace behemoth The Boeing Co. ( BA ) boosted its quarterly dividend by more than 50% and authorized a $10 billion share repurchase plan, the biggest in its history. Boeing's shares edged up 0.7% to $134.72 yesterday before the announcement. The shares rallied further in after-hours trading.

The quarterly dividend will increase to 73 cents a share (annualized $2.92 per share) from 48.5 cents (annualized $1.94) and will be payable on Mar 7 to shareholders of record as of Feb 14. Boeing's new dividend will yield 2.17% based on the shares' closing price. The company had last announced a dividend at the end of October.

The recent share buyback authorization comes in addition to the $800 million already pending from a 2007 program. In 2009, Boeing suspended its share buyback program as it was grappling with production delays and cost overruns for the 787 Dreamliner.

Boeing, with a robust backlog and growing deliveries, raised its full-year 2013 earnings guidance given the strength in its broader commercial aircraft business. Commercial Airplanes' 2013 deliveries are expected to be between 635 and 645 airplanes.

Sequestration and budget cuts notwithstanding, its defense segment also maintained a solid performance and fetched $7 billion in fresh new orders during the last reported quarter. Boeing's defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and order backlog. Total backlog increased sequentially from $410.3 billion to $415.1 billion on $27 billion of net new orders during the third quarter.

The world's largest aircraft manufacturer, Boeing recently received a sizeable order from the Pentagon, following a big win of $6.5 billion from Air Canada for its commercial unit. These contracts imply that the aerospace behemoth is prudent enough to not only maintain its foothold in the commercial space, but also remain proactive in the defense arena despite budget austerities.

The company was however confronted with multiple issues related to its high-tech 787 Dreamliner aircraft, which many believe is the future for the company. However, the company has powered through this weakness, suggesting that these recent problems shouldn't be much of a concern to investors. The stock has gained 78.3% so far this year in spite of several setbacks.

Boeing's contract wins - domestic and international - in both defense and commercial airplanes businesses will ensure a steady performance in the future.

Boeing currently carries a Zacks Rank #2 (Buy). Apart from Boeing, some well-placed stocks in the same sector include Raytheon Co. ( RTN ), Lockheed Martin Corp. ( LMT ) and Huntington Ingalls Industries, Inc. ( HII ). While Raytheon sports a Zacks Rank #1 (Strong Buy), Lockheed and Huntington presently hold a Zacks Rank #2 (Buy).

BOEING CO (BA): Free Stock Analysis Report

HUNTINGTON INGL (HII): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

RAYTHEON CO (RTN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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