Taking a two-part effort to return value to shareholders, cloud-based storage specialist EMC (NYSE:EMC) announced this morning it is increasing its stock buyback program sixfold while initiating a quarterly dividend payment to investors.
The board of directors increased the share repurchase program from $1 billion to $6 billion over the three-year period ending Dec. 31, 2015, while at the same time starting a quarterly dividend program of $0.10 per share.
The board said it expects EMC to repurchase $3.5 billion of its common stock by the end of the second quarter of fiscal 2014, which includes the $500 million it has already spent on buybacks in 2013. The first quarterly dividend payment will be paid on July 23 to shareholders of record as of the close of business on July 1.
EMC President and COO David Goulden said: "Shareholders will benefit from what we've announced today and share in our ongoing success through our long-term plan to return approximately 50% of EMC -- excluding VMware -- free cash flow through a combination of buybacks and dividends."
The cloud storage specialist also intends to add debt to its capital structure in the near term, though it believes it will be able to maintain a strong investment-grade profile. The buyback announcement and the dividend initiation are not expected to have a material impact on the business outlook EMC provided on April 24.
The regular dividend payment equates to a $0.40-per-share annual dividend, yielding 1.7% based on the closing price of EMC's stock on May 29.