The latest dividend hike by Boeing Co. (NYSE: BA) should not be a shock that it happened. What should be a surprise is how much Boeing raised its dividend — by a sharp 20% — as well as its existing stock buyback plan. 24/7 Wall St. had previously published that Boeing would be one of five likely dividend hikes, but this shareholder return of capital exceeds all internal expectations.

That 20% increase will raise its quarterly dividend to $1.09 per share. Based on the prior closing price of $143.00, Boeing’s 2.52% prior yield jumps up to 3.04%. Boeing has increased the dividend for five consecutive years and has paid a dividend consistently for more than 75 years.

The Boeing board of directors also lifted the authorization for its share repurchase program to $14 billion. Boeing’s new buyback authorization replaces the $12 billion authorization approved last December, and the company signaled that some $5.25 billion remained. Boeing said that the repurchase activity is expected to resume in January 2016, but it is expected that repurchases under the new share buyback plan will be made over the next two to three years.

The king of aerospace and defense in the United States has been winning from new jets, international and domestic fleet refreshes, and even from geopolitical tensions driving defense budgets higher. Boeing’s most recent backlog was a whopping $485 billion, with nearly 5,700 commercial airplane orders.

The long and short of the matter is that Boeing has a long road of income and cash flow ahead of it. The maker of the 787 Dreamliner last hiked its dividend in mid-December 2014, up by 25%, along with a $12 billion share buyback. So, here is why 24/7 Wall St. was surprised by 20% cash dividend hike, after previously saying:

Due to an expected lack of growth in EPS in 2015, it is safer to expect a more modest hike this time around. The view of 24/7 Wall St. is that Boeing will raise its payout by 5% to 10%, which will keep it from running into a 50% payout ratio. It is a must to remember that Boeing wants to buy back shares too and had spent $6 billion on that alone in 2015, as of the third quarter.

In short, we were calling for a dividend hike of only 5% or 10%. Boeing exceeded this expectation by far.

Boeing President and Chief Executive Officer Dennis Muilenburg said:

Once again, we are demonstrating our commitment to a balanced cash deployment strategy that fuels investments in our people, innovation and growth, and returns significant value to our shareholders. Our strategy is rooted in a foundation of strong operating performance across our business, confidence in our team and long-term market outlook and an unmatched portfolio of products and services. The new $14 billion repurchase authorization replaces the $12 billion authorization approved last December, of which $5.25 billion remained. Share repurchases for 2015 have been completed for a year-end total of $6.75 billion.

Boeing shares were last seen trading up 2.5% at $146.55 on Tuesday, after the dividend and share buyback news was announced. The stock has a consensus price target of $162.83 and a 52-week range of $115.14 to $158.83. Boeing’s market cap is currently just over $98 billion, and the stock will be in the 3% dividend yield club for Dow stocks, on any pullbacks.

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