CBS’ board authorized an accelerated $1.6 billion stock-repurchase program.
The company said it will also raise its dividend 14% to $0.25 per share from $0.22, payable Oct. 1 to stockholders of record as of Sept. 14.
"Raising our dividend and using a portion of our excess cash to buy back shares reaffirms CBS’ commitment to return a sizable portion of our strong free cash flow to shareholders," CBS president and CEO Leslie Moonves said in a statement. "Since Jan. 1, 2006, we have raised our quarterly dividend by nearly 80%."
This is the second stock buyback CBS authorized this year. In February, the company initiated a $1.5 billion program.
Companies like to buy back their own stock in order to increase shareholder value and sometimes as a show of faith in an undervalued operation. The expectation is that the repurchase program will provide return to stockholders by driving up the price of the stock, or at least by buoying it. It does not always work out that way, which is why stock buybacks have their fair share of critics.