With strong cash flow in hand and more to come, L-3 Communications [LLL] this week said it is raising its quarterly dividend by 10 percent and creating a new $1.5 billion share repurchase program.
The quarterly cash dividend will rise from 50 cents to 55 cents in March, marking the company’s ninth consecutive annual dividend increase. The stock buyback program is effective immediately and is the company’s sixth repurchase program.
L-3 last week reported that its free cash flow in 2012 was $1.1 billion and it expects to generate $1 billion this year. Despite posting a decline in net income in 2012, the company was able to keep per share earnings relatively level due to its stock repurchase program (Defense Daily, Feb. 1).
“We are pleased to increase the yield of L-3’s dividend and initiate a new repurchase program, which reiterate our confidence in the company’s continued solid financial performance going forward,” Michael Strianese, L-3’s chairman, president and CEO, said in a statement. “We remain focused on shareholder value and deploying our capital in a disciplined and balance approach that includes cash dividends and share repurchases, modest debt reduction, investment in research and development, and acquisitions.”
In 2012, L-3 paid out $195 million in dividends to shareholders and repurchased $872 million worth of its stock.