Southwest Airlines Co. (NYSE: LUV) has decided to return even more capital back to its shareholders. The super-regional discount airline’s board of directors has approved a higher dividend and a new share repurchase program.
The new quarterly dividend will rise by 50%, up to $0.06 per share from $0.04 per share. On an annualized basis, this increased dividend amounts to more than $160 million, based on approximately 692 million shares outstanding.
Southwest’s prior yield was only 0.7% or so, but shares have almost doubled from the lows of last year. The new dividend yield will be just under 1%, at 0.97%, based on a $24.80 share price.
Southwest’s new stock buyback plan is an authorization for up to $1 billion. What is more important than any part of the buyback is that an initial $200 million will be repurchased under an accelerated share repurchase program. Southwest has completed its prior $1.5 billion share buyback, and its market cap is $17.2 billion.
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Trading at $24.80, Southwest has a 52-week trading range of $12.58 to $25.07, and the consensus price target is up at $27.21.
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