Yahoo Finance Huntington Ingalls Industries' (NYSE:HII) Dividend Will Be Increased To $1.24
Huntington Ingalls Industries, Inc.'s (NYSE:HII) dividend will be increasing from last year's payment of the same period to $1.24 on 9th of December. This makes the dividend yield about the same as the industry average at 2.1%.
See our latest analysis for Huntington Ingalls Industries
Huntington Ingalls Industries' Earnings Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Huntington Ingalls Industries was paying only paying out a fraction of earnings, but the payment was a massive 139% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.
Over the next year, EPS is forecast to expand by 46.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.
Huntington Ingalls Industries Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the annual payment back then was $0.40, compared to the most recent full-year payment of $4.96. This implies that the company grew its distributions at a yearly rate of about 29% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately, Huntington Ingalls Industries' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Huntington Ingalls Industries could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Huntington Ingalls Industries' Dividend
Overall, we always like to see the dividend being raised, but we don't think Huntington Ingalls Industries will make a great income stock. While Huntington Ingalls Industries is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Huntington Ingalls Industries (1 is a bit concerning!) that you should be aware of before investing. Is Huntington Ingalls Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
