Only 4 Days Left Until Huntington Ingalls Industries Inc (NYSE:HII) Trades Ex-Dividend
Investors who want to cash in on Huntington Ingalls Industries Inc’s (NYSE:HII) upcoming dividend of US$0.86 per share have only 4 days left to buy the shares before its ex-dividend date, 29 November 2018, in time for dividends payable on the 14 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Huntington Ingalls Industries’s latest financial data to analyse its dividend attributes.
See our latest analysis for Huntington Ingalls Industries
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Huntington Ingalls Industries fit our criteria?
The company currently pays out 19% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 22%, leading to a dividend yield of around 1.6%. In addition to this, EPS should increase to $16.76. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view Huntington Ingalls Industries as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Huntington Ingalls Industries generates a yield of 1.6%, which is on the low-side for Aerospace & Defense stocks.
Next Steps:
Taking all the above into account, Huntington Ingalls Industries is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three important factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for HII’s future growth? Take a look at our free research report of analyst consensus for HII’s outlook.
Valuation: What is HII 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 HII is currently mispriced by the market.
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 editorial-team@simplywallst.com.
