Boeing Flying High on Raised Dividend, $10 Billion Buyback

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After markets closed on Monday, The Boeing Co. (NYSE: BA) announced that it is raising its quarterly dividend by 50%, from $0.485 to $0.73 for the current quarter and is increasing its share repurchase plan by $10 billion. The company said it has $800 million remaining in its current buyback program and that repurchases for 2013 are completed. The company will begin repurchasing shares again in 2014.

Boeing is the second of the mega-stocks in the Dow 30 to raise its dividend significantly in the past few days. On Friday, General Electric Co. (NYSE: GE) raised its quarterly dividend from $0.19 to $0.22, a penny more than some were expecting. GE’s 16% dividend boost was nearly three times its 2014 consensus estimated earnings growth.

Boeing has done something similar. Consensus earnings growth for next year is about 11.7%, and Boeing wants to be sure that investors get the message that the wind is at its back by boosting its dividend by more than 4-times expected earnings growth.

Compare what Boeing and GE have done with their dividend increases and what another Dow 30 stock, The Walt Disney Co. (NYSE: DIS) did with theirs. Yes, the increase was 15%, but the dividend yield is still a paltry 1.2% and Disney doesn’t even pay its dividend quarterly. Investors have to wait a whole year to get paid.

One more company we’d like to hear from before the end of the year is 3M Co. (NYSE: MMM), which currently pays an annual dividend of $2.54 for a dividend yield of 2%. That amounts to just 38% of expected 2013 operating earnings and about 34% of expected 2014 operating earnings. 3M has to do something dramatic because its stock is essentially fully valued at today’s closing price of $127.66. Boeing’s upside potential is about 10.5%, GE’s is about 6.3%, and Disney’s is about 7%. 3M needs to shake it up.

Boeing’s shares were up about 1.3% in after-hours trading on Monday at $136.50 after closing at $134.72 in a 52-week range of $72.68 to $142.00.

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