Boeing Co (NYSR: BA) Announced An Increase In Its Dividends- What Could That Mean?

The chief executive and chairman of Boeing Co (NYSR: BA), Jim McNerney, recently announced that the company has allocated a budget of around $12 billion for its share buyback program. The company has also increased its dividends by 25 percent, which means that the stockholders will get around $0.91 for each share. To put the same news another way, the company has increased the dividend figures by 88 percent during the last 2 years, and by 192 percent during the recent decade.

Such a huge increase in the dividend shows that Boeing Co (NYSR: BA) is optimistic about the coming year.

The company saw an increase of around $5 billion in its revenues from the commercial airplanes segment during the past 3 quarters. This increase compensates the $1 billion loss that the company experienced from its space, defense and security segments.

The company has a lot of orders in the backlog, which means that it will be doing just fine even if it does not get any more contracts for quite a while now.

The earnings from defense, security and space segments have increased due to the high operational figures. Market analysts are optimistic that the company will continue to report strong figures from these segments, despite their weak contribution in the backlog contracts.

The company had reported a loss of $1 billion in the revenues of its space and defense segments; however, due to improved operations and cost cutting strategies, Boeing Co (NYSR: BA) was able to bring the decline to only $65 million. To put in another way, the company improved its operating margins of defense and space segments by more than 10bps during the first 3 quarters of the year 2014.

This strategy employed by the company suggests that Boeing will continue to see increased profits and revenues in the coming quarters. The announcement of share buyback program and increase in dividends show that the company is quite confident about its cash flow.

Boeing Co (NYSR: BA) recently mentioned its cash flow for operations in its guidance report. The company improved the figures to $7 billion for the year 2014. Where this shows that the company has remarkable cash flow for operations, it also suggests that Boeing Co (NYSR: BA) is doing well in its pension plan.

The dividend increase can also mean that the management of the company is quite confident about its latest 787 Dreamliner. If that is true, the company’s financial performance will improve by many folds.

Coming to the stock prices of Boeing Co (NYSR: BA), the company, on the last trading day of December 19, 2014, started its stocks at a price of $125.63 and closed at a price of $126.26, after hitting the highest figures of $127.42. The company has a total market capitalization of $89.99 billion with a P/E (price to earnings) ratio of 18.04. As far as the dividend yield of Boeing Co (NYSR: BA) is concerned, the figures are recorded to be around 2.88 percent.