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L3Harris (LHX) Announces Quarterly Dividend Increase of 20%
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L3Harris Technologies Inc. (LHX - Free Report) recently announced that its board of directors declared a cash dividend on its common stock of $1.02 per share for the first quarter of 2021. This reflects a 20% hike from the prior payout of 85 cents per share.
Post the issuance of the new rate, the annualized dividend will be $4.08 per share. The current dividend yield of the company is 1.69%, higher than the industry average of 0.91%.
Alongside the dividend increase, management approved a new $6-billion share repurchase authorization.
Factors Supporting Dividend Hikes
A stable financial position enables L3Harris to maximize shareholders’ value through regular dividend payouts and share repurchases. As of Jan 1, 2021, the company’s cash and cash equivalents totaled $1,276 million compared with $824 million at the end of 2019. Further, in 2020, L3Harris’ cash inflow from operating activities amounted to $2,790 million, up 68.6% from $1,655 million at 2019-end. Notably, the company returned $3,015 million to shareholders through $2,290 million in share repurchases and $725 million in dividends in 2020, led by strong operational performance, acceleration of cost synergies and the successful execution of its portfolio shaping strategy.
Going ahead, the company's accelerating revenue growth across its business segments along with margin expansion will most likely improve its operating cash flow. This, in turn, will enable L3Harris to expand its capital deployment initiatives, including dividend payouts, share repurchases and reinvestments, to grow its businesses. In this line, it is imperative to mention that the company pledges to return more than $2.3 billion through share repurchase to its shareholders by the end of 2021.
Dividend Hike in the Defense Space
Stocks paying regular dividends are popular among investors, as they provide income and capital appreciation, decrease overall portfolio risk and carry tax advantages, among others. The U.S. defense stocks have been rallying significantly over the past couple of years, courtesy of notable defense budget enhancements along with growing geopolitical uncertainties. Thus, stable earnings and cash flow enable defense companies to reward shareholders with regular dividend hikes, thereby positioning them in investors’ good books.
L3Harris has raised the dividend by nearly 50% since its merger with Harris Corporation in June 2019. Another defense giant, Northrop Grumman Corporation's (NOC - Free Report) board of directors approved a 10% hike in its quarterly common stock dividend in May 2020. As a result, the annualized payout increased to $5.80 per share from $5.28 previously.
Price Performance
Shares of the company have increased 2.1% in the past six months compared with the industry’s 0.3% growth.
Zacks Rank & Key Picks
L3Harris currently carries a Zacks Rank #4 (Sell).
Leidos came up with average earnings surprise of 17.57% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has increased 0.5% to $6.40 in the past 60 days.
Transdigm Group delivered average earnings surprise of 37.24% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has climbed 0.5% to $11.91 in the past 60 days.
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L3Harris (LHX) Announces Quarterly Dividend Increase of 20%
L3Harris Technologies Inc. (LHX - Free Report) recently announced that its board of directors declared a cash dividend on its common stock of $1.02 per share for the first quarter of 2021. This reflects a 20% hike from the prior payout of 85 cents per share.
Post the issuance of the new rate, the annualized dividend will be $4.08 per share. The current dividend yield of the company is 1.69%, higher than the industry average of 0.91%.
Alongside the dividend increase, management approved a new $6-billion share repurchase authorization.
Factors Supporting Dividend Hikes
A stable financial position enables L3Harris to maximize shareholders’ value through regular dividend payouts and share repurchases. As of Jan 1, 2021, the company’s cash and cash equivalents totaled $1,276 million compared with $824 million at the end of 2019. Further, in 2020, L3Harris’ cash inflow from operating activities amounted to $2,790 million, up 68.6% from $1,655 million at 2019-end. Notably, the company returned $3,015 million to shareholders through $2,290 million in share repurchases and $725 million in dividends in 2020, led by strong operational performance, acceleration of cost synergies and the successful execution of its portfolio shaping strategy.
Going ahead, the company's accelerating revenue growth across its business segments along with margin expansion will most likely improve its operating cash flow. This, in turn, will enable L3Harris to expand its capital deployment initiatives, including dividend payouts, share repurchases and reinvestments, to grow its businesses. In this line, it is imperative to mention that the company pledges to return more than $2.3 billion through share repurchase to its shareholders by the end of 2021.
Dividend Hike in the Defense Space
Stocks paying regular dividends are popular among investors, as they provide income and capital appreciation, decrease overall portfolio risk and carry tax advantages, among others. The U.S. defense stocks have been rallying significantly over the past couple of years, courtesy of notable defense budget enhancements along with growing geopolitical uncertainties. Thus, stable earnings and cash flow enable defense companies to reward shareholders with regular dividend hikes, thereby positioning them in investors’ good books.
L3Harris has raised the dividend by nearly 50% since its merger with Harris Corporation in June 2019. Another defense giant, Northrop Grumman Corporation's (NOC - Free Report) board of directors approved a 10% hike in its quarterly common stock dividend in May 2020. As a result, the annualized payout increased to $5.80 per share from $5.28 previously.
Price Performance
Shares of the company have increased 2.1% in the past six months compared with the industry’s 0.3% growth.
Zacks Rank & Key Picks
L3Harris currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the same sector are Leidos Holdings (LDOS - Free Report) and Transdigm Group Incorporated (TDG - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Leidos came up with average earnings surprise of 17.57% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has increased 0.5% to $6.40 in the past 60 days.
Transdigm Group delivered average earnings surprise of 37.24% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has climbed 0.5% to $11.91 in the past 60 days.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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