Leidos Holdings, Inc. LDOS recently announced that its board of directors has approved a 5.3% increase in its quarterly dividend rate. The revised quarterly dividend will be 40 cents per share, payable on Dec. 31, 2024, to shareholders of record at the close of the business on Dec. 16, 2024.
Following the recent hike, Leidos will now pay an annual dividend of $1.60 per share. This represents an annual dividend yield of 0.95% based on its share price worth $168.71 as of Oct. 25, 2024.
Can LDOS Sustain Dividend Hikes?
One of Leidos Holdings' main sources of growth has been steady order flows for its combat-proven defense products from the Pentagon and other U.S. allies. These contract wins increase the company's bookings and, as a result, its backlog, bolstering its revenues. LDOS reported $4 billion in net bookings for the second quarter of 2024. At the end of June 2024, LDOS’ backlog came in at $36.49 billion, up from $34.15 billion in the previous year. This should boost LDOS’ future sales growth.
Given the geopolitical hostility prevalent worldwide and the current U.S. administration's preference for more defense spending, the macroeconomic climate in the defense space has been favorable for Leidos Holdings' prospects. In light of this, it is important to note that the fiscal 2025 U.S. defense budget, which calls for $850 billion worth of investment, implies a 1% increase from the prior year’s enacted amount. Such solid expenditure plans tend to improve the financial growth prospects of defense primes such as Leidos.
Its cash and cash equivalents, as of June 28, 2024, totaled $823 million, which improved sequentially from $633 million worth of cash generated in the first quarter of 2024 and also came in higher than its short-term debt of $567 million. Moreover, its sales witnessed a 7.7% year-over-year increase in the last reported quarter. Such solid cash balance and sales performances are likely to enable LDOS to continue to reward its shareholders with valuable dividend hikes, like the latest one.
Other Defense Companies’ Dividend Hikes
Here are some defense companies that have been rewarding shareholders with impressive dividend hikes:
In May 2024, Northrop Grumman Corp. NOC announced that its board of directors approved a 10% hike in its quarterly dividend to $2.06 per share, marking the 21st consecutive annual dividend hike. Following this, Northrop’s annual dividend payout is $8.24 per share.
Northrop boasts a long-term (three to five years) earnings growth rate of 8.7%. The Zacks Consensus Estimate for NOC’s 2024 sales implies an improvement of 5.4% from the previous year’s level.
In May 2024, Curtiss-Wright CW announced that its board of directors declared a 5% increase in the quarterly dividend to 21 cents per share. The company also authorized an additional $300 million for future share repurchases, increasing the total available authorization to $400 million.
Curtiss-Wright boasts a four-quarter earnings surprise of 11.52%, on average. The Zacks Consensus Estimate for CW’s 2024 sales implies an improvement of 7.1% from the prior-year figure.
In May 2024, RTX Corporation RTX announced a dividend of 63 cents per share, which reflected an increase of 6.8% over the prior quarter's dividend amount. Following this hike, RTX’s annual dividend payout is $2.52 per share.
RTX has a long-term earnings growth rate of 10.3%. The Zacks Consensus Estimate for RTX’s 2024 sales calls for an improvement of 6.9% from the prior-year figure.
LDOS Stock Price Movement
In the past six months, shares of LDOS have rallied 28.2% compared with its industry’s rise of 1.2%.
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LDOS’ Zacks Rank
Leidos currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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