Honeywell’s dividend yield
Investors looking for a long-term investment will want to invest in stocks with a good dividend yield, good dividend growth, and with less fluctuation in the stock price. A dividend yield is what investors get in return for every dollar they invest in a company’s equity—apart from the possible capital gains.
Assuming that Honeywell will pay the existing dividend rate for the rest of fiscal 2017, its current dividend yield stands at 2% as of September 5, 2017. Honeywell’s peers General Electric (GE), United Technologies (UTX), and Boeing (BA) have current dividend yields of 3.80%, 2.40%, and 2.4%, respectively. Honeywell’s dividend yield in the past five years has shown a falling trend. During this period, Honeywell’s dividend yield was 2.70%–1.9%. The decline in the dividend is primarily attributed to stronger growth in Honeywell’s stock price outpacing the dividend growth. Honeywell stock has more than doubled in the last five years. So far in 2017, Honeywell’s dividend yield is on a falling trend. Its current dividend yield is higher than the yield on the one-year Treasury notes.
At the end of 2Q17, Honeywell’s dividend payout stands at 37.9%. Its dividend payout has been stable at 34%–40%, which can be considered as a good payout. It’s important for the company to find a balance between the dividend payout and earnings retention. A higher dividend payout will leave the company with less support for its future growth, while a lower dividend payout indicates higher earnings retention. Higher retention could drive the company’s future growth.
Investors can hold Honeywell indirectly by investing in the Industrial Select Sector SPDR Fund (XLI). XLI has invested 4.90% of its portfolio in Honeywell as of September 5, 2017.