Honeywell announced an increase of 3.3% in its annual dividend to $3.72 per share from $3.60. Based on the company's closing price on Friday, the new annual dividend implies a yield of 2.3%. It marks the 11th consecutive year in which the software-industrial company has ramped up its dividend.
Honeywell International (HON) said that the new dividend will be effective in the fourth quarter, and the quarterly dividend of $0.93 per share will be payable on Dec. 4 to shareholders of record on Dec. 13.
In July, Honeywell posted stronger-than-expected 2Q earnings of $1.26 per share, in comparison to analysts’ expectations of $1.21. Its revenues of $7.48 billion also beat the Street estimates of $7.29 billion. However, both earnings and revenues declined 40% and 19.1%, respectively, on a year-over-year basis due to a 26% decline in aerospace sales related to Boeing's 737 MAX delays and weak demand for commercial aircraft. (See HON stock analysis on TipRanks).
On Aug. 11, RBC Capital analyst Deane Dray cut the stock to Hold from Buy and slashed the price target to $158 (2.2% downside potential) from $166. Dray noted that the company has lagged in a cyclical rebound as it remains "in the throes" of an extended downturn in both its commercial aerospace and oil and gas businesses. The analyst added that the commercial airline and oil and gas sectors pose challenges in 40% of Honeywell's end markets. He believes that the valuation is "undemanding here” amid few catalysts in the near term.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 5 Holds. The average price target of $164.83 implies upside potential of 2.1% to current levels. Shares have declined 8.8% year-to-date.