How can increasing debt boost potential returns?
The first statement refers to the return on investment to the owners of the shares. After they are paid the 1 B dollar dividend  what happens to the company afterwards is not going to change that fact. Of course they would prefer that the company continue to do well. If they sell the shares immediately after receiving the dividend then they don't care.  Since the company had  1 B dollars less equity after paying the dividend it is easy to understand that in or near 2005 they would want to replace that capital with new debt and your quote suggests that is what happened. Less equity and more debt, if all else is unchanged, results in higher ROE (return on equity) which is one of the company's measures. Owners might benefit from this measure improving if the market likes it. Of course all else is not unchanged because they have to pay interest on the new debt. The actual effect on ROE depends upon circumstances. So the dividend was certainly good for the owners and what happens afterwards is potentially good but uncertain for the owners.
The part of the second statement, &quot;raising the company's interest costs and pushing down profit&quot;, refers of course to the company's profitability position. In other words this can be interpreted as the company's return on revenue (profit margin); not the owner's return on investment.