How Have Price Gains Impacted RTN’s Dividend Yield?



Net sales and EPS performance in 2015 and 2016

Raytheon Company (RTN) is a technology and innovation frontrunner that focuses on worldwide defense and other government markets. The company recorded 4% net sales growth in 2016 compared to 2% in 2015. Integrated defense systems, missile systems, and forcepoint drove the 2015 growth, offset by intelligence, information and services, and space and airborne systems. The company saw growth in the US, Asia-Pacific, Middle East and North Africa regions, which was offset by its other regions including Europe.

Gross profit rose 8% in 2016 compared to 3% in 2015. Operating income rose 8% in 2016 after dropping 5% in 2015. The company’s EPS rose 9% in 2016 after falling 5% in 2015. Interest expenses remained flat in 2016 after increasing in 2015. Share buybacks further enhanced the EPS numbers.

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Net sales and EPS performance in 1H17

Raytheon Company’s net sales rose 4% in 1H17. Gross profit rose 1% due to higher costs. Operating income reported flat growth as operating expenses increased slightly. All of these factors boiled down to a 5% decline in EPS, offset by share buybacks. The decrease in interest expense was offset by other expenses.

Dividend yield

The company has posted dividend growth over the years. However, the dividend yield has slipped to 1.7% as prices have risen 32.3% on a YTD basis. In comparison, the Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3% and YTD price gains of 15.7%. The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.3% and YTD price gains of 14%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 22.7%. Raytheon Company has managed to increase its free cash flow balance over the years.

Let’s discuss two dividend ETFs with exposure to Raytheon Company. The First Trust NASDAQ Rising Dividend Achievers ETF (RDVY) offers a 1.2% dividend yield and a PE (price-to-earnings) of 15.7x. The Vanguard High Dividend Yield ETF (VYM) has a 3% dividend yield and a PE of 21.6x.


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