Boeing raises its dividend 20%, boosts buyback plan to $20 billion, reaffirming its bullish outlook

  • Boeing's board voted Monday to raise its quarterly dividend 20 percent to $2.05 per share in 2019.
  • Additionally, the Dow component's board approved a $20 billion stock buyback plan, replacing its prior authorization.
  • With Boeing delivering a record 568 commercial airplanes through the end of the third quarter this year, the company's cash flow has been exceeding expectations, fanning hopes it would boost its dividend dramatically.
United Airlines Boeing 757-200 taking off at Los Angeles International Airport.
Laser1987 | Getty Images
United Airlines Boeing 757-200 taking off at Los Angeles International Airport.

Despite growing concerns that the global economy is slowing down, Boeing sent a big message to shareholders it remains upbeat about its business. The board voted Monday to raise its quarterly dividend 20 percent to $2.05 per share in 2019.

"Boeing's strong operational performance, financial health and positive future outlook underpin our continued investments in our people and our workplace, in innovative products and services, and in select strategic acquisitions and partnerships that accelerate our growth strategy," said Boeing Chairman and CEO Dennis Muilenburg.

Additionally, the Dow component's board approved a $20 billion stock buyback plan, replacing its prior authorization.

The company's stock, which has a market capitalization of $179.5 billion, rose more than 1 percent in after-hours trading on the news. Boeing shares have gained 7 percent since the start of the year.

With Boeing delivering a record 568 commercial airplanes through the end of the third quarter this year, the company's cash flow has been exceeding expectations. As a result, many analysts had predicted the company would make a dramatic increase in its dividend.

Cai von Rumohr, the aerospace analyst for Cowen and Co., told clients in late November to expect a 12 percent to 15 percent dividend hike by Boeing. He is among those on Wall Street who believe concerns about a global slowdown hurting Boeing are overblown.

"Given visibility of a seven-year backlog and still-solid traffic growth, it would take a sharp economic slowdown to disrupt the favorable current production outlook," von Rumohr wrote in a research note backing his bullish outlook.

Boeing's dividend increase comes as the company has ramped up production of its most popular model, the 737. The company's monthly production of 737's has gone from 47 last year to its current rate of 52 and is expected to climb to 57 by the end of next year.

The production increase comes even as the Boeing continues to deal with fall-out from the crash of a Lion Air 737 Max in late October. Investigators have yet to determine an official determination of what caused the plane carrying 189 passengers to plunge into the Java Sea shortly after take-off from Jakarta. The initial investigation has raised questions about whether or not the plane's sensors and software malfunctioned, causing the 737 MAX to crash into the water.

—CNBC's Meghan Reeder contributed to this report.