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Pro Analysis

Boeing shares to surge on a big dividend hike coming any day now, Morgan Stanley says

A Boeing 737 MAX 8 airliner lifts off for its first flight on January 29, 2016 in Renton, Washington.
Stephen Brashear | Getty Images
A Boeing 737 MAX 8 airliner lifts off for its first flight on January 29, 2016 in Renton, Washington.

Investors should buy Boeing in anticipation of larger-than-expected dividend raise, which will spur a big rally in the company's shares, according to Morgan Stanley.

The firm reiterated its overweight rating on the aerospace giant.

"We have high expectations for a dividend hike," analyst Rajeev Lalwani wrote in a note to clients Wednesday.

"A large dividend hike remains a possibility and we're looking for a 30% increase in the coming weeks, thus possibly creating a re-rating event."

Boeing's current dividend yield is 2.8 percent, according to FactSet.

The analyst's call comes after President-elect Donald Trump tweeted on Tuesday that he would like to cancel the government's Boeing Air Force One order, saying the "costs are out of control." The controversy caused Boeing shares to dip briefly Tuesday morning, but the stock then made back that decline and more since then.

Lalwani expects the company will announce an update to its dividend policy "within the next two weeks" likely on a Monday after the close, according to the note. The analyst notes that Boeing has updated its payout in mid-December during the last four years.