(Reuters) – Caterpillar has authorized a $20 billion share buyback and increased its quarterly dividend by 8%, the company said on Wednesday, sending shares up 2%.
With the expanded authorization, the company can now repurchase up to $21.8 billion of common stock.
The heavy machinery manufacturer expects to continue to return virtually all of the free cash flow from its machinery, energy and transportation (ME&T) businesses to shareholders over time through dividends and share buybacks.
Caterpillar (NYSE:) has paid higher annual dividends to shareholders for 30 consecutive years and is a member of the Dividend Aristocrats Index.
The index measures the performance of S&P 500 companies that have increased their dividends every year for the past 25 consecutive years.
The company increased its dividend to $1.41 per common share, payable in August.
Shares of the global economy are up nearly 12% this year as higher infrastructure spending from the US government’s $1 trillion infrastructure bill kept demand for big machines robust.
However, in April the company warned of a sales decline in the current quarter as volumes were hit by dealers tightening equipment inventories and a slump in business outside North America.
