CBS Corp. announced an increased dividend and a $1.6 billion share buyback in a bid to boost the company’s stock, which has been flat since the beginning of the year.
CBS raised its quarterly dividend to 25¢ from 22¢, a 14% increase. CBS has raised its quarterly dividend five times, up a total of 80%, since January 2006. The $1.6 billion buyback comes after CBS completed its most recent, $1.5 billion buyback program in May.
“Raising our dividend and using a portion of our excess free cash to buy back shares reaffirms CBS’ commitment to return a sizable portion of our strong free cash flow to shareholders,” CEO Leslie Moonves said.
CBS Corp. has had the better-performing stock since the split of Viacom into two separate companies — CBS Corp. and Viacom — in January 2006. Wall Street considered CBS to be undervalued out of the gate, and Moonves has aggressively marketed the company to investors.
But share growth stalled, and news of the buyback and dividend increases weren’t enough to move CBS shares, which finished unchanged Tuesday at $31.50 on the NYSE as the Dow Jones Industrial Average added more than 100 points.
One analyst at Lehman Brothers said that beyond the buyback and dividend increase, “There are few visible catalysts for CBS shares in the next six to 12 months.”