General Dynamics Corp's Dividend Analysis
Exploring the Sustainability and Growth of General Dynamics Corp's Dividends
General Dynamics Corp (NYSE:GD) recently announced a dividend of $1.32 per share, payable on 2024-02-09, with the ex-dividend date set for 2024-01-18. 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 look into General Dynamics Corp's dividend performance and assess its sustainability.
What Does General Dynamics Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
General Dynamics is a defense contractor and business jet manufacturer. The firm's segments include aerospace, marine, combat systems, and technologies. General Dynamics' aerospace segment creates Gulfstream business jets and operates a global aircraft servicing operation. Combat systems produces land-based combat vehicles such as the M1 Abrams tank and Stryker armored personnel carrier, as well as munitions. The marine segment creates and services nuclear-powered submarines, destroyers, and other ships. The technologies segment contains two main units, an IT business that primarily serves the government market and a mission systems business that focuses on products that provide command, control, computing, intelligence, surveillance, and reconnaissance capabilities to the military.
A Glimpse at General Dynamics Corp's Dividend History
General Dynamics Corp has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis.
General Dynamics Corp has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 39 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down General Dynamics Corp's Dividend Yield and Growth
As of today, General Dynamics Corp currently has a 12-month trailing dividend yield of 2.10% and a 12-month forward dividend yield of 2.12%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, General Dynamics Corp's annual dividend growth rate was 7.30%. Extended to a five-year horizon, this rate increased to 8.50% per year. And over the past decade, General Dynamics Corp's annual dividends per share growth rate stands at 9.80%.
Based on General Dynamics Corp's dividend yield and five-year growth rate, the 5-year yield on cost of General Dynamics Corp stock as of today is approximately 3.16%.
The Sustainability Question: Payout Ratio and Profitability
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 2023-09-30, General Dynamics Corp's dividend payout ratio is 0.44.
General Dynamics Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks General Dynamics Corp's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. General Dynamics Corp'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 General Dynamics Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. General Dynamics Corp's revenue has increased by approximately 1.50% per year on average, a rate that underperforms than approximately 56.44% 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, General Dynamics Corp's earnings increased by approximately 0.60% per year on average, a rate that underperforms than approximately 56.16% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.50%, which underperforms than approximately 56.69% of global competitors.
Next Steps for Investors
In conclusion, General Dynamics Corp's consistent dividend history, aristocrat status, and a reasonable payout ratio reflect a commitment to shareholder returns. Coupled with its solid profitability rank, the company appears to maintain a stable foundation for its dividends. However, investors should also consider the company's growth metrics, which suggest that while General Dynamics Corp is capable of sustaining its dividends, its growth rates are not leading the industry. This mixed picture highlights the importance of a comprehensive approach to dividend investing, considering both the security of current payments and the potential for future growth. For investors seeking to diversify their portfolios with dividend-paying stocks, General Dynamics Corp presents an interesting opportunity to balance yield and stability.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
