Owning CBS pays dividends
EmptyContinuing to return cash to its shareholders, CBS Corp. on Tuesday unveiled the fifth increase in its quarterly dividend since its separation from Viacom Inc. 20 months ago, along with a new $1.6 billion stock buyback.
New York-based CBS boosted its quarterly dividend by 14% to 25 cents per share. The dividend is payable Oct. 1 to stockholders of record as of Sept. 14.
In addition, CBS said its board has approved a $1.6 billion accelerated share-repurchase transaction. The company is expected to complete the buyback in deals with big institutional shareholders in the coming days.
The repurchase follows a $1.5 billion stock buyback this year, which also was mainly done via an accelerated share deal.
"Raising our dividend and using a portion of our excess cash to buy back shares reaffirms CBS' commitment to return a sizable portion of our strong free cash flow to shareholders," president and CEO Leslie Moonves said.
The company has raised its quarterly dividend by nearly 80% since becoming a separately traded entity at the start of 2006.
CBS Class B shares closed up 0.2% at $31.58. During the past year, they have traded at $27.33-$35.75.
Investors had been looking for an update on how CBS would use its excess cash. When the company reported its second-quarter earnings at the end of July, its stock declined that day in part because Wall Street observers said they had hoped for an update on the use of cash.
Banc of America Securities analyst Jonathan Jacoby suggested Tuesday that the latest capital return announcement "might be the last one for a while," arguing that CBS management will not want to increase its leverage by much from here.
"Furthermore, we believe that going much higher might impact management's strategy to keep some 'dry powder' for future acquisitions," Jacoby said.