Strong dividend growth
Boeing (BA) has always tried to enhance shareholders’ wealth through dividend payments and share buybacks. Dividends and share repurchases depict a company’s sound financial position and give investors confidence in the stock.
The aerospace and defense (IYJ) contractor has been paying a regular quarterly dividend for the last 80 years. Since 2012, Boeing has been raising its quarterly dividend once every four quarters. The company’s quarterly dividend has risen ~389% in the last seven years. Last year, Boeing distributed $3.95 billion in dividends, which was over three times higher than $1.26 billion paid in 2011.
In December, the company raised its quarterly dividend 20% to $2.055 per share.
Dividend yield and payout ratio
Despite rising more than 33% year-to-date, Boeing stock still has impressive dividend yields. The company has a dividend yield of 1.9%, while Lockheed Martin (LMT) and General Dynamics (GD) have yields of 2.9% and 2.2%, respectively. Northrop Grumman (NOC) has a lower dividend yield of 1.7%.
Boeing’s dividend payout ratio is the second-highest ratio among its peers after Lockheed Martin. Boeing, General Dynamics, Lockheed Martin, and Northrop Grumman’s dividend payout ratios are 37.9%, 32.3%, 46.6%, and 26%, respectively.
Boeing has also been enhancing shareholders’ wealth through aggressive share buybacks. After initiating the first share repurchase program in 2013, Boeing has repurchased ~$41 billion worth of its common stock. Last year, the company bought back $9 billion worth of its common stock.
In December, the company increased its share buyback authorization limit to $20 billion from $18 billion approved in December 2017.