Harris Ups Quarterly Dividend, Boosts Shareholder Wealth
Harris Corporation’s HRS board recently announced a 6.4% hike in its quarterly cash dividend, raising the payout by 3 cents to 50 cents per share. The company will pay the dividend on Sep 24, 2015, to shareholders of record at the close of business as on Sep 11, 2015. Meanwhile, the cash dividend to be paid on a yearly basis is $2, with an annual yield of 2.6%.
Harris has been paying uninterrupted dividends for the last 32 years and this raise marks the company's fourteenth yearly dividend hike. Over the last five years, this 6.4% dividend hike is the sixth annual increase made by the company.
At the end of the fourth quarter of fiscal 2015, Harris had cash & cash equivalents of $481 million. The excess cash available will be utilized to repurchase shares or pay dividends to shareholders.
Meanwhile, Boeing Co. BA and General Dynamics Corp. GD, belonging to the same industry, paid quarterly dividends of 91 cents and 69 cents with dividend yields of 2.73% and 1.91%, respectively, which happen to be quite high in comparison to Harris’ payout. However, Harris’ current dividend yield is quite impressive as compared to General Dynamics.
Apart from consistently increasing dividends, Harris continues to buy back shares on a regular basis. At the end of fiscal 2015, the company bought back shares worth $165 million.
Continuous order wins, a huge order backlog along with strong demand for Harris’ next-generation Falcon III tactical radios in the international markets are poised to drive revenues, going forward.
On the flipside, reduced national defense expenditures may hurt Harris’ cash position. Moreover, the company ended the last reported quarter with nearly $5.2 billion of debt compared with $1.6 billion in the earlier-year quarter. Thus, we believe that mounting debts and increased dividend payments will certainly impact the company’s cash position.
Harris currently sports a Zacks Rank #1 (Strong Buy). Another favorably ranked stock in the same space is Juniper Networks, Inc. JNPR with a Zacks Rank #1.
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