The Boeing Company (NYSE:BA) has pleased shareholders over the past 10 years, by paying out dividends. The company is currently worth US$186b, and now yields roughly 2.6%. Should it have a place in your portfolio? Let’s take a look at Boeing in more detail.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
Does Boeing pass our checks?
Boeing has a trailing twelve-month payout ratio of 38%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 43% which, assuming the share price stays the same, leads to a dividend yield of 2.5%. Moreover, EPS should increase to $19.33. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. BA has increased its DPS from $1.68 to $8.22 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes BA a true dividend rockstar.
In terms of its peers, Boeing has a yield of 2.6%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Boeing as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BA’s future growth? Take a look at our free research report of analyst consensus for BA’s outlook.
- Valuation: What is BA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BA is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.