Sept. 6 (Bloomberg) -- Woolworths Holdings Ltd., a South African clothing and food retailer, surged to a record on speculation the company will continue returning cash to shareholders through share buybacks and higher dividends.

The stock gained as much as 4.2 percent to 38.55 rand, its highest since the shares started trading in October 1997, and was 2.5 percent higher at 37.93 rand as of 3:36 p.m. in Johannesburg. Shares in the company have climbed 18 percent since Aug. 1, outperforming a 4.3 percent increase in the FTSE/JSE Africa General Retailers Index.

The company’s final dividend rose 37 percent to 13.5 cents a share for the year through June and it bought back 275 million rand ($39 million) of its shares, it said on Aug. 25. Sales of clothing and footwear climbed 11 percent, compared with market growth of 9.5 percent, it said in the statement.

“Internally, they are getting things right and from a market point of view, they are taking market share,” Patrick Mathidi, a portfolio manager at Momentum Asset Management, said by phone today. “They are starting to generate a lot of cash, so there is a decent dividend yield and the share price is underpinned by a lot of share buybacks.” Woolworths has a dividend yield of 3.1 percent, according to data compiled by Bloomberg.

--Editors: Ana Monteiro, Peter Branton

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net