Embarq Boosts Dividend 10 Percent

Embarq Corp., the landline spin-off of Sprint Nextel Corp., on Wednesday increased its quarterly dividend and authorized a $500 million share repurchase program.

Stock prices fell more than 2 percent on the news, dropping $1.08 to $45.97 during early afternoon trading.

The company’s board hiked the dividend by 10 percent. Shareholders will receive their payouts on March 31.

"This is our second dividend increase in less than a year, and at yesterday's closing price, the repurchase authorization represents nearly 7 percent of our outstanding shares," said Bill Owens, Embarq’s board chairman in a prepared statement. "These actions reflect the strength of our business as well as our commitment to returning cash, above prudent levels needed in the business, to shareholders."

Standard & Poor’s Ratings Services said its rating and outlook on Embarq wouldn’t be affected by the announcements.

“Embarq's free cash flow generation should be sufficient to fund the increased dividend and share repurchase program without materially affecting its low investment grade financial profile,” S&P wrote in a bulletin to clients and media.

The only caveat was that if debt rises significantly – debt incurred by access-line losses, stagnant DSL revenue or debt-financed acquisitions or share repurchases – “the outlook could be revised to negative.”

Embarq said it had 153 million shares outstanding as of Dec. 31.

Embarq Corp. www.embarq.com

Standard & Poor’s Ratings Services www.standardandpoors.com

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