The board of directors made it official this week, voting for an 8.9 percent annual dividend hike. It’s the 13th straight year the Waltham-based defense contractor has boosted its quarterly payout and, incredibly, all but one of those increases were higher in percentage terms than this one.
Raytheon has increased its quarterly dividend to 79.75 cents per share from 73.25 cents, bringing the annualized payout to $3.19 from $2.93. The first installment of the new dividend will be paid May 11 to shareholders of record as of April 12.
I wrote two weeks ago (http://bit.ly/2nFp4Ot) about what an incredible deal holding Raytheon stock has been for the past dozen years, and my point had nothing to do with the fact the stock has quintupled in value in that time (not that that hasn’t helped). Rather, my emphasis has been on the steady, and rather outsized, increases in its dividend.
In 2004, Raytheon’s annual dividend was 80 cents per share. This year, it will be nearly quadruple that. Have any of your other sources of income done that? For the vast majority of you, I imagine the answer is no.
This is passive income, that which you do not work for. Someday, you won’t be working, and that someday may come sooner than you want it to. Having an investment that you can count on to go up every year is not a bad asset to have.
Raytheon has done a good job of diversifying its customer base. It has done a better-than-good job of weeding out efficiency in the past few years, as it has grown its profits as its annual revenue has fluctuated between $22 billion and $25 billion.
Earnings per share in 2016 were $7.55, up 11.7 percent from $6.76 recorded in 2015. Researchers at Zacks estimate that the company has long-term earnings growth potential of 7.5 percent — not extravagant but solid enough to maintain some level of dividend growth (if not 9 or 10 percent every year).