Southwest Airlines Co. (NYSE: LUV) has just delivered what shareholders love to hear with a commitment to a higher dividend and a higher stock buyback. Unlike the spotty history of dividends among major airlines, Southwest said that this represents its 159th consecutive quarterly dividend payment.

The discount airline decided to increase its quarterly dividend by one-third. Its June dividend will be raised to $0.10 per share from the current level of $0.075 per share. This dividend’s history has been one of a shareholder return of late — in half of 2012 and 2013 it was just $0.01 per share per quarter, but that jumped to $0.04 in 2014. It then jumped to $0.06 and to $0.075.

The $0.40 annualized dividend should be more than sustainable, even considering its planned stock buyback. The company’s consensus analyst earnings per share estimates are $4.14 for 2016, $4.59 for 2017 and $6.17 for 2018.

Needless to say, Southwest still has massive room to boost its payout, if it decided to, plus Southwest has $3.5 billion or so in cash and investments. Annualized, this increased dividend amounts to approximately $255 million, based on approximately 632 million shares of common stock outstanding.

This new stock buyback plan is for up to $2 billion worth of common shares. Of this sum, Southwest said specifically that it intends to repurchase an initial $500 million worth of its common stock under an accelerated share repurchase program. Additional data on its buyback a history was shown as follows:

The company recently completed its previous total $1.5 billion share repurchase authorization, including $700 million repurchased this year under accelerated share repurchase programs. The Company repurchased $500 million in common stock pursuant to an accelerated share repurchase program launched during first quarter 2016, and $200 million pursuant to an accelerated share repurchase program launched during second quarter 2016, receiving approximately 11.9 million and approximately 4.5 million total shares, respectively. Under the total $1.5 billion share repurchase authorization, the Company repurchased approximately 37.3 million shares.

An official statement was made by Gary Kelly, Southwest’s chairman, president and CEO:

I’m pleased to announce the Board’s decision today to increase our quarterly dividend by 33 percent, which would provide an approximate one percent annual dividend yield to our Shareholders, based on yesterday’s closing stock price of $42.20. On a cumulative basis over the past five years, including today’s increase, our quarterly dividend has grown more than twenty fold. The Board also authorized a $2 billion share repurchase program, representing our largest repurchase authorization in a decades-long history of returning value back to our Shareholders through share repurchases. Since 2010, we have reduced our outstanding shares by over 25 percent through the cumulative repurchase of $4 billion of common stock. Our strong performance, investment grade balance sheet, and cash flow outlook has enabled the Board’s actions today that reinforce our ongoing commitment to return value to our shareholders.

The old dividend yield was only 0.7%, but the new dividend yield will be just a hair under 1% for new investors. As far as the buyback on a relative basis, Southwest has a $27.5 billion market cap.

Southwest shares were last seen up 2.2% at $43.15 on Wednesday. Its consensus analyst price target is $55.82 and the 52-week range is $31.36 to $51.34.

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