Investor interest in Cedar Rapids, Iowa-based Rockwell Collins (NYSE:COL) has been strong over the past 12 months as the company's shares outperformed the S&P 500. That interest was repaid last week. The company, which makes electronics for military and commercial customers mostly in the aviation industry, boosted its dividend and expanded its share buyback plan.

Rockwell Collins has raised its dividend, next paid on Sept. 7, significantly. Its quarterly payout is now $0.12 per share, up from $0.03. That brings the firm's dividend yield up to 1.45%. The buyback plan, meanwhile, was ripe for an update. Started in December 2001, the company had repurchased $390 million of an authorized $400 million -- that number was upped to $600 million. (Kudos to Rockwell Collins for telling investors in a press release the average price it has paid for its shares.)

"The strength of our balance sheet and our demonstrated ability to generate strong operating cash flow allow us to provide this additional value to shareowners without impacting our ability to continue executing our long-term growth strategies," said President and CEO Clay Jones. Indeed, a quick look at Rockwell Collins' financials from recent years shows a debt-free company with strong cash flows even as profits have fluctuated.

The outlook for Rockwell Collins seems solid. The company recently announced a deal expanding its involvement with Boeing's (NYSE:BA) Dreamliner project. Other airlines have also selected the company's projects in recent months. The proven ability to secure U.S. government and military contracts, which made up nearly 40% of 2003 revenue, brings a valuable revenue stream.

A quick look at this company suggests lots to like, perhaps especially for the dividend-focused investors who enjoy the Motley Fool Income Investor newsletter and understand the trade-off Rockwell Collins makes when it returns money directly to investors rather than dumping it back into the business. A rich valuation, however -- the stock trades at some 19 times 2005 EPS estimates, though only 10% growth is currently expected -- indicates that the word is out.

Fool contributor Dave Marino-Nachison doesn't own shares of Rockwell Collins.