Boeing Co. is set for its largest dividend increase since the financial crisis, returning cash to investors as it tries to bolster a stock price hurt by delays to its 787 Dreamliner jets.
The quarterly payout may rise 9.1 percent to 48 cents a share next month, according to data compiled by Bloomberg. That compares with a 4.8 percent boost last year and no change in 2010, and it would be the most for Chicago-based Boeing since a 14 percent jump in December 2007.
Boeing has $11 billion in cash and the promise of more to come as it boosts output to get planes from a record $307 billion order backlog to their buyers, who typically pay 40 percent of the price on delivery. Chief Financial Officer Gregory Smith said Nov. 13 that share buybacks are “a big priority” and that Boeing is studying its dividend.
“Boeing doesn’t get much benefit of the doubt from investors after all the program delays and issues,” said David Rowlett, a Baltimore-based analyst for T. Rowe Price, which owns about 30 million Boeing shares.
The 787, the first jetliner built chiefly of composite materials, was delivered to its initial customer in 2011, more than three years late. It accounts for 805 of the 4,234 planes in Boeing’s backlog.
“We kind of went through the development cycle, now we’re into production,” Smith said Nov. 13 at a Goldman Sachs industrials conference. “We have successfully executed those rate breaks, making the deliveries, so as we kind of get closer to the end of the year, the plan would be to provide more clarity, specifics on cash deployment.”
The stock is up just more than 1 percent this year, while the Standard & Poor’s 500 index gained more than 11 percent.
“Boeing should be deploying more cash to shareholders, particularly since the share price is depressed,” Douglas Harned, an analyst with Sanford C. Bernstein & Co. in New York, said in a Nov. 6 note. “We would like to see plans for cash to shareholders above a minimum level of $2 billion for 2013.”
That would show Boeing’s confidence in meeting targets to raise output and deliveries, Harned said. Order growth, usually a driver of the stock, hasn’t helped Boeing keep pace this year with rival EADS or the broader market.
Boeing is working to boost output 60 percent in the four years through 2014, a move that analysts estimate will help push revenue up 36 percent to $93.7 billion, according to a Bloomberg survey.
The share price has languished compared with previous rebounds, according to Barclays PLC research. The doldrums persist even as Boeing won the most orders in any nine-month period since at least 1958 and built a backlog more than eight times last year’s jet sales.
“Boeing has become a ho-hum stock in that there’s not a lot of new money interested in it,” said Ken Herbert, an analyst with Imperial Capital in San Francisco. His “hold” rating on the stock puts him in the minority in a Bloomberg survey that found 28 “buy” recommendations, three “holds” and one “sell,” indicating analysts see potential gains for stockholders.
