The Dallas company says the moves reflect its strong financial performance and cash outlook. It will buy back $200 million in stock through an accelerated repurchase program.
Southwest says its next dividend will be paid June 25 to shareholders of record on June 4.
In April Southwest said its net income more than doubled and reached record levels. The company is alone among major U.S. carriers in being consistently profitable for many years, and for a time it was the only major U.S. airline to pay a dividend. It raised its dividend to 4 cents from a penny a year ago.