Raytheon Boosts Shareholder Value, Ups Dividend by 11% - Analyst Blog

A generic image of a person with a pen and a calculator
Credit: Shutterstock photo

The board of directors of Raytheon Co.RTN approved of a 10.7% annual dividend hike, marking the 11th consecutive rise. The company has increased the quarterly dividend to 67 cents per share from 60.5 cents, bringing the annualized payout to $2.68 with a yield of 2.42%. The dividend will be paid on Apr 30 to shareholders of record as of Apr 1.

The hike was in the cards following its impressive earnings performance having beaten estimates in three of the last four quarters, with an average positive surprise of 0.48%.

A steady dividend payout policy primarily reflects Raytheon's robust financial position and balanced capital deployment strategy. The increase in dividend at periodic intervals has been one of the most attractive features of this defense major, providing risk-adjusted returns to its stockholders. The latest rise comes almost after a year of its prior dividend increase declared on Mar 2014.

Raytheon ended 2014 with operating cash flow from continuing operations of $2.1 billion. However, this was lower than last year's $2.4 billion. Yet, earnings per share, or EPS, stood at $1.86, up 27.4% from $1.48 a year ago.

During the fourth quarter, the company acquired Blackbird Technologies, which is expected to help boost the company's offerings in secure mobile communications, persistent surveillance, and cybersecurity solutions. Blackbird will contribute to Raytheon's Intelligence, Information and Services business.

As the world's largest missile maker, Raytheon experienced healthy demand for its products, particularly from foreign customers. The company has been seeing continuous growth in its international sales for the past few years. In 2014, international sales were 29% of the total net sales. Rising demand from the Gulf countries as well as from the Asia-Pacific region will likely be the company's key revenue driver.

However, new bookings in the fourth quarter were $7,109 million compared with $7,517 million in the year-ago period, reflecting a 5.4% decline. Total backlog at the end of 2014 was $33.57 billion, down 0.3% year over year.

Raytheon currently has a Zacks Rank #4 (Sell). Better-ranked players in the industry include Rockwell Collins Inc. COL , Spirit AeroSystems Holdings, Inc. SPR and TransDigm Group Incorporated TDG , all three carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ROCKWELL COLLIN (COL): Free Stock Analysis Report

RAYTHEON CO (RTN): Free Stock Analysis Report

TRANSDIGM GROUP (TDG): Free Stock Analysis Report

SPIRIT AEROSYS (SPR): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos