Boeing announces $10 billion buyback, hikes dividend

US aircraft and defence equipment maker Boeing Co on Tuesday announced a new $10 billion share buyback programme spread over the next two-three years and a 50 per cent hike in quarterly dividend payout.

The board of directors of Boeing authorised the $10 billion share repurchase, which represents about 10 per cent of Boeing's outstanding stock, chairman, president and chief executive Jim McNerney announced today.

Boeing board also declared that the company's regular quarterly dividend will increase by approximately 50 per cent to 73 cents per share.

With a target of delivering a record 635 to 645 aircraft this year, Boeing is floating on cash. Boeing is also ramping up commercial jet production as declining US military spending affects its defence businesses.

The company is preparing to invest billions of dollars in two new models, the narrow-body 737 MAX and the wide-body 777X.

"These actions reflect sustained, strong operational performance by our businesses, increasing cash flow, and our confidence in the future," said McNerney. "Our team's relentless focus on business execution and competitiveness is providing the financial strength to continue investing in our core businesses while increasing our returns to shareholders."

The $10 billion repurchase authorisation approved today is in addition to the approximately $800 million remaining from the 2007 stock repurchase authorisation.

Repurchase activity for 2013 is complete and is expected to resume in January 2014, Boeing said in a release.

"Our balanced cash deployment strategy provides increased dividends and share repurchase authorisation to deliver consistent returns to our shareholders while maintaining investment in productivity and innovation for future growth," said Boeing executive vice president and chief financial officer Greg Smith.

The timing and volume of repurchases are at the discretion of Boeing management, however it is currently expected that the share repurchases will be made over the next two to three years. Repurchases may be made on the open market or in privately negotiated transactions, Boeing said.

The dividend declared today is payable on 7 March 2014, to shareholders, it added.

Boeing shares rose about 2 per cent in extended trading after the news. They closed at $134.72 on the New York Stock Exchange on Monday.

Major US companies have authorised nearly $123 billion in buybacks in the second quarter of 2013, according to FactSet Research Systems Inc.