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UPS Boosts Stock Repurchase Authorization To $10 Bln; Raises Dividend 8.8%

United Parcel Service (UPS), the world's largest package delivery company, said Thursday that its board has declared a 8.8 percent increase regular quarterly dividend, and also raised its share repurchase authorization to $10 billion.

The company noted that its dividend has more than tripled since 2000, with cash dividends being either increased or maintained every year for more than four decades.

The Atlanta, Georgia-based company's board raised its regular quarterly dividend on all outstanding Class A and Class B shares by 8.8 percent to $0.62 per share from $0.57 per share, and is payable on March 12 to shareholders of record as on February 25, 2013.

"This dividend increase reflects the power of the UPS business model to deliver consistent returns to shareowners. During 2012 we generated almost $5.4 billion in free cash flow, enabling reinvestment for growth and greater shareowner distributions, which are a top priority at UPS," Chairman and CEO Scott Davis said in a statement.

Further, the company also said the board has reauthorized its share repurchase program and raised the authorization to $10 billion, with no expiration date.

The boosted share repurchase authorization replaces the earlier $5 billion stock repurchase authorization on May 2012, which had no expiration date and replaced the one originally announced in 2008.

The company also said in May that it plans to repurchases of $1.5 billion in 2012, and expected the same level of activity in 2013. However, it raised its share repurchase guidance for 2013 to $4.0 billion on January 31, 2013.

The raise in dividend and the boosted share repurchase program can be seen as an action to provide shareholders with some value after UPS' agreed $6.8 billion acquisition of Dutch rival TNT Express N.V. (TNTEF, TNTEY) was shelved on January 30 after the European Commission formally prohibited the proposed deal, citing competitive concerns. The two firms announced the deal in March 2012, when UPS agreed to buy the TNT Express for a sweetened offer of 9.50 euros per share.

Additionally, the company announced that John Thompson, CEO of Virtual Instruments Corp. and the former Chairman and CEO of Symantec Corp. (SYMC), will not stand for re-election when his term as a director on the company's boar expires in May. He is the chairman of the board and has served on the UPS board since 2000, making him the second longest serving board member.

"John's strategic counsel helped guide the development of new technologies, which led to multiple innovations in the way we serve customers and manage the business. His insights were invaluable and his contribution can't be underestimated," Davis noted.

UPS closed Thursday's regular trading session at $82.69, up $0.19 or 0.23% on a volume of 3.76 million shares.

by RTT Staff Writer

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