Honeywell International, Inc. : HON-US: Dividend Analysis : May 19th, 2017 (record date) : By the numbers : May 19, 2017

Our analysis is based on comparing Honeywell International, Inc. with the following peers – United Technologies Corporation, Boeing Company, Emerson Electric Co., General Electric Company, Lockheed Martin Corporation, General Dynamics Corporation, BAE Systems plc Sponsored ADR, SAFRAN SA Unsponsored ADR, Rolls-Royce Holdings PLC Sponsored ADR and Dow Chemical Company (UTX-US, BA-US, EMR-US, GE-US, LMT-US, GD-US, BAESY-US, SAFRY-US, RYCEY-US and DOW-US).

Honeywell International, Inc.’s dividend yield is 1.99 percent and its dividend payout is 39.94 percent. This compares to a peer average dividend yield of 2.76 percent and a payout level of 51.36 percent. This relatively lagging dividend performance could spur some dividend action going forward – as long as the company’s relatively strong dividend quality score of 92 out of a possible score of 100 looks sustainable.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to March 31, 2017), HON-US paid a high quality dividend, which represents a yield of 1.93% at the current price.
  • Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were high quality and 1 was medium quality.
  • The ending cash balance, with a dividend coverage of 5x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to March 31, 2017), HON-US paid a high quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.22x), investing cash flow (coverage of -1.43x), issuance cash flow (coverage of 0.94x) and twelve-month prior cash (coverage of 2.33x), for a total dividend coverage of 6x.

HON-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -0.37x). Thus, the total coverage including share buybacks is 6.37x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.

Dividend History

Item 2012-12-31 2013-12-31 2014-12-31 2015-12-31 2016-12-31 Latest
Dividend Yield (%) 2.44 1.89 1.93 2.16 2.17 1.99
Dividend Payout (%) 41.4 34.15 35.04 35.55 39.52 39.94

A complete list of metrics and analysis is available on the company page.

Company Profile

Honeywell International, Inc. is a diversified technology and manufacturing company. It offers aerospace products and services; turbochargers; control, sensing and security technologies for buildings and homes; specialty chemicals; electronic and advanced materials; process technology for refining and petrochemicals; and energy efficient products and solutions for homes, business and transportation. The company operates through the following segments: Aerospace; Automation and Control Solutions; and Performance Materials and Technologies. The Aerospace segment supplies aircraft engines, integrated avionics, systems and service solutions, and related products and services for aircraft manufacturers, airlines, aircraft operators, military services, and defense and space contractors. The Aerospace segment’s products and services include auxiliary power units, propulsion engines, environmental control systems, connectivity, electric power systems, engine controls, flight safety, communications, navigation, radar and surveillance systems, aircraft lighting, management and technical services, logistics services, advanced systems and instruments, aircraft wheels and brakes, repair and overhaul services, turbochargers and thermal systems. The Automation and Control Solutions segment provides products, software and technologies for environmental and energy solutions; sensors, switches and controls for sensing and productivity solutions; security and fire safety products; industrial safety products; and building solutions and services for homes, commercial buildings and industrial facilities. The Performance Materials and Technologies segment develops and manufactures advanced materials, process technologies and automation solutions. Its process technology and products include catalysts and adsorbents, equipment and consulting services to produce gasoline, diesel, jet fuel, petrochemicals and renewable fuels for the petroleum refining, gas processing and petrochemical industries. Honeywell International was founded by Albert M. Butz in 1885 and is headquartered in Morris Plains, NJ.

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