Today witnessed a 4% surge in Western Union's share price.
A pair of investor-satisfying actions revealed after market close on Friday propelled Western Union's (WU 0.48%) stock higher on Monday. The catalyst for this surge was the announcement of a substantial share buyback program by the company, which encouraged investors to pour into the stock, bumping its price by 4% on the opening day of the week. This climb surpassed the 0.4% increase of the S&P 500 (^GSPC 1.26%).
Buybacks and Dividend Distribution
Western Union's board of directors authorized an open-ended $1 billion common stock repurchase plan without a fixed expiration date. The company specified that the quantity and timing of these purchases will depend on various factors, including but not limited to stock price and market conditions.
Over the years, Western Union has consistently repurchased its own stock. In 2023, it allocated around $308 million towards this endeavor; since 2018, its annual repurchases ranged from $240 million to $553 million.
In addition to the new buyback program, the company declared its most recent common stock quarterly dividend. It will distribute approximately $0.24 per share on Dec. 31, to investors who hold a record as of Dec. 23. Although this news is positive, it's not surprising; Western Union has been consistently distributing this amount each quarter since the beginning of 2021. At the latest closing price, this dividend offers a relatively high 8.7% yield.
Ample Funds
One of the most effective strategies to please investors is to maintain a steady stream of dividend payouts and share buybacks. Western Union manages its cash resources fairly cautiously, ensuring that free cash flow (FCF) is usually sufficient to cover the majority or all of its expenses related to these activities.
Even though it is not a thrilling, high-growth stock, its high dividend yield makes it an appealing option for income investors.
Investors were enticed to Pour more money into Western Union's stock due to the announced share buyback program, contributing to a 4% increase on its opening day. The company's ample funds allow it to maintain a steady stream of dividend payouts and share buybacks, appealing to income investors.
