DuPont Fabros Shares Gain After Dividend Hike, Stock Buyback

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The ACC5 data center, one of the northern Virginia properties operated by DuPont Fabros Technology.

Shares of data center developer DuPont Fabros Technology (DFT) gained in early trading today after the company said it would hike its dividend and announced a share repurchase program. Both moves were welcomed by investors, and are helping shares rebound from a selloff following last month's earnings report.

DuPont Fabros stock jumped 9 percent to $24.98 in early trading Friday before falling back slightly. At 9:40 a.m. DFT shares stood at $23.76, up 87 cents (nearly 4 percent) from yesterday's close.

The company said late Thursday that it would raise the dividend on its common stock from 15 cents to 20 cents per share for the fourth quarter of 2012. The board of DuPont Fabros also approved a share repurchase program to acquire up to $80 million of the company's common stock over the next 12 months. The dividend hike should make DFT stock more attractive to investors, while the share repurchase plans adds support for the stock price and allows DuPont Fabros to benefit from its own success.

"We believe this initiative provides us with an attractive opportunity to increase shareholder value and reflects our confidence in the strength and growth potential of our business," said Mark Wetzel, Chief Financial Officer and Treasurer of DuPont Fabros Technology, Inc.

Shares of DuPont Fabros slid nearly 10 percent in a single session on Oct. 25 as Wall Street analysts scrutinized lease extensions signed with three of the company’s largest customers. Several of the leases were not due to be renewed for three to four years, and the terms of the early renewals – with rental rates about 18 percent lower than the initial lease – caught the analyst community off guard. Shares have since rebounded slightly.