Our analysis is based on comparing Raytheon Co. with the following peers – Northrop Grumman Corporation, General Dynamics Corporation, Boeing Company, Rockwell Collins, Inc., FLIR Systems, Inc., L3 Technologies, Inc., Lockheed Martin Corporation, Orbital ATK, Inc., ITT, Inc. and Honeywell International Inc. (NOC-US, GD-US, BA-US, COL-US, FLIR-US, LLL-US, LMT-US, OA-US, ITT-US and HON-US).
Raytheon Co.’s dividend yield is 1.90 percent and its dividend payout is 39.33 percent. This compares to a peer median dividend yield of 1.60 percent and a payout level of 31.79 percent. This type of dividend performance might make it a good stock for dividend investors. In addition, the company’s relatively good dividend quality score of 92 out of a possible score of 100 points to some sustainability of its robust payout ratio, and underscores its attractiveness for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), RTN-US paid a high quality dividend, which represents a yield of 1.90% 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 3 were high quality and 2 were medium quality.
- The ending cash balance, with a dividend coverage of 4.00x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), RTN-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 3.36x), investing cash flow (coverage of -0.03x), issuance cash flow (coverage of -1.18x) and twelve-month prior cash (coverage of 3.76x), for a total dividend coverage of 5.00x.
RTN-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.17x). Thus, the total coverage including share buybacks is 6.18x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
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 Yield (%)||3.41||2.43||2.21||2.14||2.04||1.9|
|Dividend Payout (%)||35.4||35.71||33.7||39.41||39.33||39.33|
A complete list of metrics and analysis is available on the company page.
Raytheon Co. develops and manufactures engineering technology for government and commercial use in the areas of defense, government electronics and information technology. It provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects, and command, control, communications and intelligence systems, as well as a wide range of mission support services. The company operates its business through four segments: Integrated Defense Systems, Intelligence, Information & Services, Missile Systems, Space & Airborne Systems and Forcepoint. The Integrated Defense Systems segment provides integrated air and missile defense, radar solutions, naval combat and ship electronic systems, command, control, communications, computers and intelligence (C4I) solutions and international and domestic air traffic management systems. The Intelligence, Information & Services segment provides a full range of technical and professional services to intelligence, defense, federal and commercial customers worldwide and specializes in global intelligence, surveillance and reconnaissance, navigation, DoD space and weather solutions, cyber security, analytics, training, logistics, mission support, and engineering and sustainment solutions. The Missile Systems is a developer and producer of missile and combat systems for the armed forces of the U.S. and other allied nations and also provides advanced airframes, guidance and navigation systems, high-resolution sensors, surveillance, targeting and netted systems. It develops and supports a broad range of advanced weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors and advanced combat sensor solutions. The Space & Airborne Systems segment designs and develops integrated sensor and communication systems for advanced missions, including traditional and non-traditional ISR, precision engagement, unmanned aerial operations, and space and also provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, communication systems, and space-qualified systems for civil and military applications. The Forcepoint segment provides information technology security products and related services designed to protect commercial and government organizations and their customers and other users from external and internal threats, including modern cyber-threats, advanced malware attacks, information leaks, legal liability and productivity loss. Raytheon was founded by Laurence K. Marshall, Vannevar Bush and Charles G. Smith on July 7, 1922 and is headquartered in Waltham, MA.
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