What: Shares of Johnson Controls (NYSE:JCI) surged more than 5% in midday trading after the company announced a $3 billion increase in its share buyback program Wednesday evening. This increase, combined with the amount left over from the previous buyback program, means Johnson Controls has authorization of up to $3.65 billion. The company has reportedly repurchased $400 million in its current fiscal year already, and will repurchase another $800 million this month through a program with Goldman Sachs.

So what: This is a big deal for investors, who obviously cheered the move and sent the stock price climbing, as Johnson Controls has historically only returned value to shareholders through an increased dividend. According to Morningstar, Johnson Controls has paid a dividend every year since 1887, and has increased the dividend in 33 of the past 35 years – a ridiculously strong history.

Now, as it plans to significantly increase its share buyback program, it will return value to shareholders through two different avenues.

JCI Dividend Chart

JCI Dividend data by YCharts

Now what: The first repurchases will total $1.2 billion; the remainder will be used in fiscal 2015 and 2016, according to Johnson Controls' presentation. The repurchases will likely come partially from cash on hand, and perhaps even a small amount of newly issued debt – although the company won't come close to risking its investment-grade credit rating.

"We have a strong balance sheet and are committed to disciplined capital allocation, giving us the capacity to continue investing in our businesses while meaningfully increasing the cash we return to our shareholders," CEO Alex Molinaroli said in a press release.

The upside: Johnson Controls offers upside for a couple of different reasons. It has competitive advantages that are driven by customers' high switching costs, and cost advantages from its sheer size, which enable the company to pour cash into its research and development. Its ability to focus on innovation can be discouraging for new entrants to the markets in which Johnson Controls is a major player.

Another upside for investors is that Johnson Controls plans to curtail its large automotive interiors business, which has been one of the few drags on the company's earnings. This segment lost $13 million on sales of $4.2 billion for fiscal 2013. When the company announced its potential sale plans in late October, Johnson Controls' stock price initially surged by more than 7%.

Johnson Controls is a strong business that returns value to shareholders -- even moreso now, thanks to its share buyback program. It also represents a business with strong competitive advantages, and its remaining automotive should benefit from U.S. automakers' ongoing rebound.

Fool contributor Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.