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Northrop Grumman Corporation (NOC - Analyst Report) has increased its quarterly dividend by 11% bringing the annualized payout to $2.44 per share from $2.20 per share earlier.

The quarterly dividend, after the hike, will come to 61 cents per share, up from the prior payment of 55 cents per share. The increased quarterly dividend will be payable on Jun 12, 2013, to shareholders of record as on May 28, 2013. With the current annual dividend of $2.20 per share, the company generates a dividend yield of 3.07%.

This is the tenth consecutive annual increase in Northrop Grumman's quarterly dividend. Its prior dividend increase was made in May 2012. Last time, the company had increased its quarterly dividend by 10% to 55 cents per share from its previous payout of 50 cents per share.

Northrop has continuously focused on its cash deployment strategy via dividend payouts and share repurchases. During the first quarter of 2013, the company repurchased 6.5 million shares of its common stock for approximately $456 million. Currently, the company has share repurchase authorization of $1.0 billion. Indeed, Northrop Grumman’s strong balance sheet and cash flows provide substantial financial flexibility and a cushion through an incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

In Mar 2013, its close peer General Dynamics Corporation (GD - Analyst Report) also increased the quarterly dividend by 9.8% to 56 cents per share culminating in an annual dividend of $2.24 per share.

Northrop’s product line is well positioned in high priority categories, such as defense electronics, unmanned aircraft and missile defense. Revenue and earnings growth continue to be driven by its strong presence in the current focus areas of cyber security, modernization of defense and homeland security assets, intelligence, surveillance and reconnaissance systems, advanced electronics and software development.

Last month, Northrop Grumman reported first quarter 2013 earnings that easily surpassed the Zacks Consensus Estimate and were also higher than the year-ago figure. The significant upside in earnings was attributable to a lower share count and strong operating performance.

The company presently retains a short-term Zacks Rank #2 (Buy). Other stocks worth considering are Erickson Air-Crane Incorporated (EAC - Snapshot Report) and Wesco Aircraft Holdings, Inc. (WAIR - Snapshot Report). While Erickson Air-Crane carries a Zacks Rank #1 (Strong Buy), Wesco Aircraft holds a Zacks Rank #2 (Buy).

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