L3Harris Technologies (NYSE:LHX) Is Increasing Its Dividend To $1.20
L3Harris Technologies, Inc.'s (NYSE:LHX) periodic dividend will be increasing on the 21st of March to $1.20, with investors receiving 3.4% more than last year's $1.16. This takes the annual payment to 2.1% of the current stock price, which is about average for the industry.
Check out our latest analysis for L3Harris Technologies
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, L3Harris Technologies was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
The next year is set to see EPS grow by 74.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.
The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $1.68, compared to the most recent full-year payment of $4.64. This means that it has been growing its distributions at 11% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
Investors could be attracted to the stock based on the quality of its payment history. However, L3Harris Technologies' EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 1.4% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
Overall, a dividend increase is always good, and we think that L3Harris Technologies is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for L3Harris Technologies that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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