Boeing (BA) has been a consistent dividend payer for more than two decades. In 4Q16, BA paid a total of $672 million in dividends, which represented ~30.5% of the free cash flow it generated in 4Q16.
Boeing now has an indicated dividend yield of 3.3% and a trailing-12-month yield of 2.6%. Although this is lower than its 3.7% yield at the start of 2016, it’s still higher than the industrial average dividend yield of 2.3%.
Boeing’s indicated dividend yield is higher than all of its peers. Lockheed Martin (LMT) has an indicated dividend yield of 2.9%, as compared to United Technologies’ (UTX) 2.4%, and General Dynamics’ (GD) 1.7%.
Cash dividend coverage ratio
This ratio is calculated as Income before extraordinary items, minus minority and preferred dividends over dividends paid. The ratio measures the ability of the company to pay a dividend.
After its 4Q16 earnings, BA’s cash dividend ratio stands at 3x, which is also its average for the past 16 quarters. This means that Boeing can just about sustain dividend payouts at its current state.
Boeing has a history of increasing its dividend payout once every four quarters. It last increased its dividend payout in 1Q16 and, as expected, has announced another increase for the first quarter of 2017. For fiscal 2017, Boeing will increase its dividend payout by ~30%, which amounts to a dividend per share of $1.37.
Notably, Boeing makes up ~5.4% of the Dow Jones Industrial Average ETF’s (DIA) portfolio.