Raytheon Co. (RTN) announced that its Board of Directors increased its quarterly dividend by 15%, bringing its annualized dividend rate to $1.72 per share from the previous payout rate of $1.50 per share.
With this hike, the company said it has now raised dividend for the seventh consecutive year.
Raytheon Co. said it will now pay a quarterly dividend of 43 cents per share to its shareholders, compared with $0.375 paid earlier. The increased quarterly dividend will be paid on April 28, 2011 to shareholders of record as on April 6, 2011.
Earlier, in March 2010, Raytheon Co. had declared a dividend increase of 21%, from $1.24 per share to $1.50 per share, on an annual basis. The company has been paying dividends since 1964.
Raytheon Co.’s new annualized dividend rate reflects a current yield of 2.97%. This compares favorably with the current dividend yields of its closest peers – The Boeing Co. (BA) with an yield of 2.31% and Northrop Grumman Corporation (NOC) with an yield of 2.77%.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, operational improvements and an above industry average ROE. Raytheon’s strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
In January this year, Raytheon reported its fourth-quarter and fiscal 2010 results. The company ended 2010 with cash and cash equivalents of $3.6 billion versus the 2009 year-end level of $2.6 billion. Long-term debt at 2010 end was $3.6 billion, higher than the level of debt at end 2009. Cash from operations in 2010 was $1.9 billion, lower than $2.7 billion in the year-ago period.
Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S., with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.
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