Cummins’ board of directors approved increasing the company’s quarterly cash dividend on common stock by about 25 percent Tuesday.
The dividend, which is payable on Sept. 2 to shareholders of record on Aug. 22, will increase from 62.5 cents per share to 78 cents per share.
“Cummins is demonstrating that we can produce strong returns for our shareholders, while continuing to invest in the future and meet our daily commitments to our customers with the best products and services that help them succeed,” said Tom Linebarger, Cummins chairman and chief executive officer.
Scott DeDomenic, a senior vice president and an analyst with Columbus-based Hilliard Lyons, said the announcement is more good news for Cummins and the local community.
“You don’t increase your dividend unless you feel confident that your plan is on target,” DeDomenic said. “It also shows that a lot of the research and development money that they have spent developing engines is behind them and there is free cash flow that can be returned to the shareholders.”
The board also authorized Cummins to repurchase up to $1 billion in shares of common stock upon completion of its current $1 billion share repurchase program.
“The increase in our dividend and the latest share repurchase program reinforces our commitment to increasing returns to shareholders and reflects our confidence in our performance over the long term,” Linebarger said.