An In-depth Analysis of LHX's Dividend Performance and Sustainability
L3Harris Technologies Inc(LHX, Financial) recently announced a dividend of $1.14 per share, payable on 2023-09-19, with the ex-dividend date set for 2023-09-01. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into L3Harris Technologies Incs dividend performance and assess its sustainability.
Understanding L3Harris Technologies Inc
L3Harris Technologies provides products for the command, control, communications, computers, intelligence, surveillance, and reconnaissance, or C4ISR, market. The firm produces uncrewed aerial vehicles, sensors, and avionics, as well as provides military and commercial training services and maintains the U.S. Federal Aviation Administration's communications infrastructure. In July 2023, the company acquired Aerojet Rocketdyne, a key supplier of rocket motors to the space and defense industry.
Tracing L3Harris Technologies Inc's Dividend History
L3Harris Technologies Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis.
L3Harris Technologies Inc has increased its dividend each year since 2001. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 22 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Exploring L3Harris Technologies Inc's Dividend Yield and Growth
As of today, L3Harris Technologies Inc currently has a 12-month trailing dividend yield of 2.55% and a 12-month forward dividend yield of 2.57%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, L3Harris Technologies Inc's annual dividend growth rate was 21.40%. Extended to a five-year horizon, this rate decreased to 15.90% per year. And over the past decade, L3Harris Technologies Inc's annual dividends per share growth rate stands at an impressive 13.30%.
Based on L3Harris Technologies Inc's dividend yield and five-year growth rate, the 5-year yield on cost of L3Harris Technologies Inc stock as of today is approximately 5.33%.
Is L3Harris Technologies Inc's Dividend Sustainable?
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, L3Harris Technologies Inc's dividend payout ratio is 1.07. This may suggest that the company's dividend may not be sustainable.
L3Harris Technologies Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks L3Harris Technologies Inc's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Assessing Growth Metrics for Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. L3Harris Technologies Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and L3Harris Technologies Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. L3Harris Technologies Inc's revenue has increased by approximately 19.80% per year on average, a rate that outperforms than approximately 84.67% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, L3Harris Technologies Inc's earnings increased by approximately 16.30% per year on average, a rate that outperforms than approximately 63.81% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.60%, which outperforms than approximately 55.37% of global competitors.
Concluding Remarks
With a solid dividend history, impressive growth rates, and strong profitability, L3Harris Technologies Inc presents an attractive case for dividend investors. However, the high payout ratio could be a concern for the sustainability of dividends in the long run. Therefore, investors should keep an eye on the company's future earnings and payout ratio. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
