Honeywell International (NASDAQ:HON) Is Increasing Its Dividend To $1.19

The board of Honeywell International Inc. (NASDAQ:HON) has announced that it will be increasing its dividend by 5.3% on the 5th of December to $1.19, up from last year's comparable payment of $1.13. The payment will take the dividend yield to 2.2%, which is in line with the average for the industry.

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Honeywell International's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, Honeywell International was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 37.4% over the next year. If the dividend continues on this path, the payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Honeywell International

Honeywell International Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $2.07 in 2015, and the most recent fiscal year payment was $4.52. This means that it has been growing its distributions at 8.1% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Honeywell International hasn't seen much change in its earnings per share over the last five years. Honeywell International is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

We Really Like Honeywell International's Dividend

Overall, a dividend increase is always good, and we think that Honeywell International is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Honeywell International (of which 1 is a bit unpleasant!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.