Flush with cash from gangbuster sales of flat-panel televisions,
on Thursday more than doubled its quarterly dividend and expanded an existing share repurchase authorization.
Circuit City raised its quarterly dividend to 4 cents from 1.75 cents, effective with the payout it expects to make in October. The 16-cent implied annual dividend comes out to about $28 million a year and boosts the yield on its common shares to about 0.65%.
The added $400 million of buyback capacity brings Circuit City's cumulative authorization to $1.2 billion. As of May 31, 2006, the company had repurchased 49.6 million shares at a cost of $733 million under its previous authorization.
"After completing a five-year strategic plan review, the board of directors has approved management's recommendation of an increase in both the quarterly dividend as well as the authorization level for stock buybacks," Circuit City said. "Our strong balance sheet combined with confidence in our ability to deliver sustainable growth in revenues, earnings and free cash flow make this an appropriate step in driving shareholder value."
The shares closed at $26.40 Wednesday. In premarket trading Thursday, they added 40 cents, or 1.5%, to $26.80.