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CSX Corporation Raises Dividend, Increases Share Buybacks Income Investors 2018-02-13 06:39:12 CSX corporation csx stock NASDAQ CSX dividend CSX Corporation (NASDAQ:CSX) declares a 10% dividend hike and increases its share repurchase program. Here's the Story. CSX Stock,Dividend Stocks,News

CSX Corporation Raises Dividend, Increases Share Buybacks

CSX Corporation Returning Cash to Investors

In today’s stock market, most companies return cash to investors in two ways: paying dividends and repurchasing shares. And now, one company has some good news on both fronts.

On Monday February 12, CSX Corporation (NASDAQ:CSX) announced that its Board of Directors has approved a 10% increase in its quarterly dividend rate to $0.22 per share. The dividend will be paid on March 15, 2018 to shareholders of record as of March 1. (Source: “CSX Corporation Announces Increase in Dividend and Share Repurchase Program,” CSX Corporation, February 12, 2018.)

At the same time, the company is also increasing its share repurchase program to $5.0 billion. With share buybacks, investors don’t get a check in the mail directly. However, by reducing the number of shares outstanding, a share repurchase program allows each existing investor to own a slightly larger portion of the company.

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“The CSX Board of Directors has confidence in the quality of our franchise and our long-term prospects,” said James M. Foote, CSX’s President and Chief Executive Officer in a statement on Monday. “The share repurchase program increase to $5 billion that the CSX board has authorized is a demonstration of this confidence.” (Source: Ibid.)

Monday’s announcement was the latest sign of strength for the railroad transportation company. CSX reported earnings last month. In 2017, the company generated adjusted earnings of $2.30 per share, representing a 27% increase from 2016. (Source: “CSX Corporation Announces Fourth Quarter and Full-Year 2017 Earnings,” CSX Corporation, January 16, 2018.)

If the company can maintain this kind of financial performance, it should have no problem covering its raised annual dividend rate of $0.88 per share.

CSX Corporation’s decision to increase dividends and buybacks cheered up investors. On Monday, shares of CSX stock surged 4.46% to $53.16 apiece. With the new dividend rate, the company offers an annual yield of 1.66%.


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