Raytheon Boosts Dividend

Zacks

Raytheon Company (RTN) has increased its quarterly dividend by 10%, bringing the annualized dividend to $2.20 per share from the previous payout of $2.00 per share.

Following the hike, the company will now pay a quarterly dividend of 55 cents as against the 50 cents paid earlier. The said dividend will be paid on May 2, 2013, to shareholders of record as of the close of business on Apr 3, 2013. This increase would generate a dividend yield of 3.86% based on the current market price.

This is the company’s ninth consecutive annual dividend increase. Last year, in Mar 2012, the company had increased the quarterly dividend by 16% to 50 cents per share. The uninterrupted dividend increase demonstrates the financial strength and the company’s dedication to a balanced capital deployment strategy.

Other stocks that recently increased their dividend to compete in the market are General Dynamics Corporation (GD) with a quarterly hike of 9.8% to 56 cents, L-3 Communications Holdings Inc. (LLL) with a rise of 10% to 55 cents and Parker Hannifin Corporation (PH) increasing its payout by 4.9% to 43 cents.

Raytheon maintains a strong focus on program execution and the prudent management of capital and investments. Its capital deployment strategy balances funding for business growth on the one hand and returning cash to shareholders on the other. The growth of the business is supported by capital expenditures, acquisitions, and prudent balance sheet management, including debt repayments and pension contributions. Shareholder wealth is generated through share buybacks and dividend payments.

As a part of a previously announced share repurchase program, the company repurchased 1.8 million shares of common stock for $100 million in the fourth quarter of 2012. For full-year 2012, the company repurchased $15.9 million shares for $825 million. As of Dec 31, 2012, Raytheon had approximately $1.3 billion remaining under this repurchase program.

In spite of the declining trend in U.S. defense spending, Raytheon is one of the best-positioned companies in the sector. The company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow and operational improvements.

However, these postives are offset by uncertainity related to the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks Rank #3 (Hold).

Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S., with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.

 

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