Mohacsy's Safe Portfolio Member Forum

[dexprs]

Boeing: Thumbs Up to Dividend Hike! Thumbs Down to Buyback? -- Barron's Blog
DOW JONES & COMPANY, INC. 11:30 AM ET 12/12/2017
Symbol Last Price Change
BA 290.205up +7.045 (+2.49%)
QUOTES AS OF 11:56:19 AM ET 12/12/2017
In another boost for Boeing(BA) ( BA), the high-flying airplane manufacturer announced Monday that it will raise its quarterly dividend by 20%, to $1.71 a share.

The shares have returned 87% this year on strong operating performance, compared with 20.7% for the S&P 500.

Factoring in the higher dividend, the stock, which was at $283 and change late Monday afternoon, yields about 2.4% -- well above the S&P 500's yield of about 1.9%.

The company's payout ratio -- the percentage of earnings paid out as dividends -- was around 60% last year, a reasonable level that provides the company with sufficient flexibility for future increases.

A big dividend increase was expected given the air framer's strong free cash flow, though perhaps not this big. Last year it announced it would increase its quarterly dividend to $1.42 a share from $1.09, a 30% hike.

In addition to announcing the dividend increase, the company said it had replaced its existing share repurchase program with a new authorization of $18 billion. The only problem with that: Despite the increased authorization, Boeing(BA) will probably buy back fewer shares this time than it did when it after authorizing a $14 billion repurchase plan in 2016, says Cannacord Genuity's Ken Herbert.

No matter. Shares of Boeing(BA) have gained 2.3% to $289.68 at 11:18 a.m. today, easily outpacing the Industrial Select Sector SPDR ETF's ( XLI) 0.1% advance to $74.63.

More at Barron's Income Investing blog, http://www.barrons.com/income-investing