Northrop Grumman's (NYSE:NOC) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Northrop Grumman Corporation (NYSE:NOC) has announced that the dividend on 18th of June will be increased to $2.31, which will be 12% higher than last year's payment of $2.06 which covered the same period. This takes the annual payment to 1.7% of the current stock price, which is about average for the industry.

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Northrop Grumman's Future Dividend Projections Appear Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Northrop Grumman's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 24.3%. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Northrop Grumman

Northrop Grumman Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $2.80 in 2015, and the most recent fiscal year payment was $8.24. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Northrop Grumman has impressed us by growing EPS at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Northrop Grumman's prospects of growing its dividend payments in the future.

We Really Like Northrop Grumman's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Northrop Grumman that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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