Honeywell’s Dividend Yield: An Upward Trend?

Honeywell’s dividend yield

As of February 19, Honeywell’s (HON) dividend yield was 2.14%, which is higher than its dividend yield of 2.06% at the end of the fourth quarter. In the past six years, Honeywell’s dividend yield has been 1.8%–2.7%. In comparison, Boeing (BA), United Technologies (UTX), and Textron (TXT) have dividend yields of 2.0%, 2.37%, and 0.15%, respectively. So, Honeywell’s dividend yield is more or less on par with its peers. However, United Technologies is ~20 basis points higher than Honeywell’s dividend yield.

Honeywell’s Dividend Yield: An Upward Trend?

Current dividend yield?

As we mentioned above, Honeywell’s dividend yield has been hovering around 1.8%–2.7% despite the company’s dividend growing at a compound annual growth rate of ~12.2% in the past six years. Honeywell’s lower dividend yield is mainly due to the increase in the stock price, which has outpaced the dividend growth.

Honeywell’s current dividend yield is lower than the yield generated from the risk-free one-year Treasury bonds, which might be a little discouraging for dividend investors. However, investors should also be aware that the increased stock price resulted in a lower dividend yield, which gives investors the opportunity for better capital gains. With the current dividend yield, investors might not look at Honeywell as an alternate investment.

Investors could hold Honeywell indirectly by investing in the Industrial Select Sector SPDR ETF (XLI). XLI invests 5.0% of its portfolio in Honeywell as of February 20.