Lear Corp. said on Thursday it would split its stock two-for-one, begin a $400 million share buyback program and start paying a quarterly dividend -- steps that prove how it is progressing in shoring up its balance sheet after a 2009 bankruptcy. Lear, which supplies auto seating systems and electrical systems, said it will pay a quarterly dividend of 25 cents per share on a pre-split basis.
Lear, which came out of bankruptcy in November 2009, has benefited from a drop in costs and production capacity and a recovery in global auto production during the last 18 months.
Shares in Lear rose by 1% in early trading. Since May 2010, the stock has gained over 60%. Based on its shares outstanding before the split, the new quarterly dividend will cost Lear almost $53 million each year. The share buyback program runs until February 2014.
According to one analyst, the moves that Lear has taken will help improve both investor interest and liquidity in the stock, which surpassed the $100-per-share threshold earlier this month.
In early trading, Lear's shares increased $1.76 or 1.6% to $112.89. In a note for clients, KeyBanc Capital Markets analyst Brett Hoselton said that it looks at this report favorably and it is “encouraged to see (Lear) return cash to shareholders in the form of both dividends and share repurchase.” [via autonews - sub. required]