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Northrop Grumman (NOC) Announces 10% Hike in Dividend Payout

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Northrop Grumman Corporation (NOC - Free Report) recently announced that its board of directors approved a 10% hike in its quarterly common stock dividend. This, in turn, resulted its annualized payout to increase to $6.92 per share from the prior $6.28. This represents an annual dividend yield of 1.51% based on its share price worth of $459.28 as of May 17, more than the industry’s yield of 0.00% and the Zacks S&P 500 composite’s yield of 1.48%.

The new quarterly dividend of $1.73 per share is up by 16 cents from the earlier quarterly dividend of $1.57. The raised dividend will be paid out on Jun 15, 2022 to shareholders of record at the close of the business on May 31, 2022.

This marked the 19th consecutive annual increase by the company, thus highlighting strength in its cash flow position and its ability to consistently reward shareholders with hiked dividend payouts.

Will Northrop Grumman Sustain Dividend Hikes?

Northrop Grumman not only rewards shareholders with hiked dividends but also repurchases shares at regular intervals to increase its shareholders’ worth. To this end, it is imperative to mention that in the first quarter of 2022, NOC’s board of directors authorized a new share repurchase program of up to an additional $2 billion in the share repurchases of the company’s common stock.

Such an impressive way of distributing excess cash through hiked dividends, coupled with the accelerated share repurchase activity, is buoyed by its strong financial position. In this context, it is imperative to mention that Northrop Grumman ended its first-quarter 2022 results with solid cash and cash equivalents of $2,174 million.

As of Mar 31, 2022, Northrop Grumman’s total outstanding share repurchase authorization totaled $3.8 billion.

Moreover, the company expects to return at least 100% of its 2022 transaction-adjusted free cash flow to shareholders through dividends and share repurchases activity while expecting its adjusted free cash flow in the range of $1.50-$1.80 billion in 2022, based on the current tax law. We believe that the company’s solid financial position will enable it to duly meet these targets along with offering lucrative dividend hikes to its shareholders, like the latest one.

Peer Moves

A dividend hike is a common strategy adopted by companies to deploy their capital and reward shareholders at the same time. Some defense companies that have consistently hiked and paid dividends to shareholders are:

In May 2022,Curtiss-Wright Corporation (CW - Free Report) announced that its Board of Directors approved a hike in its quarterly dividend to 19 cents per share, reflecting an increase of 6% from the prior payout. With the current hike, the company will now pay an annual dividend of 76 cents per share.

Curtiss-Wright expects adjusted earnings in the range of $8.05-$8.25 per share for 2022. The company expects sales in the range of $2,530-$2,580 million in 2022. Shares of CW have returned 14.1% to its investors in the past year.

In April 2022, Raytheon Technologies (RTX - Free Report) announced a 7.8% hike over the prior quarter's dividend to 55 cents per outstanding share of Raytheon Technologies’ common stock.

RTX’s earnings improved by 27.8% in the first quarter from the year-ago quarter’s adjusted earnings of 90 cents. The company expects to generate a free cash flow worth approximately $6 billion in 2022. Shares of Raytheon Technologies have returned 6.5% to its investors in the past year.

In March 2022, General Dynamics (GD - Free Report) announced an increase of 5.9% in its quarterly dividend to $1.26 per share and marked the 25th consecutive annual dividend increase.

General Dynamics’ quarterly earnings soared by 5.2% from $2.48 per share in the year-ago quarter. As of Apr 3, 2022, General Dynamics’ cash and cash equivalents were $2,907 million compared with $1,603 million as of Dec 31, 2021. Shares of GD have rallied 16.4% in the past year.

Price Movement

In the past year, shares of Northrop Grumman have rallied 24.6% against the industry’s decline of 39.1%.

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Zacks Rank

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.