Unpacking the Dividend Performance and Prospects of BAE Systems PLC
BAE Systems PLC(BAESY, Financial) recently announced a dividend of $0.58 per share, payable on 2023-12-07, with the ex-dividend date set for 2023-10-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into BAE Systems PLC's dividend performance and assess its sustainability.
What Does BAE Systems PLC Do?
BAE Systems is a British global defense, security, and aerospace company and the largest defense contractor in Europe; it is one of six prime contractors to the U.S. Department of Defense. For reporting purposes, the company has five operating segments: electronics systems is the group's U.S.- and U.K.-based electronic warfare systems; the cyber, security, and intelligence segment supplies intelligence and security solutions to the U.S. government; platforms and services manufactures combat vehicles and munitions and performs ship repair services to the U.S. Defense Department; the air segment includes BAE's share of U.S. and European air programs as well as its businesses in Saudi Arabia and Australia; and the maritime segment comprises U.K. land- and marine-based activities.
A Glimpse at BAE Systems PLC's Dividend History
BAE Systems PLC has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BAE Systems PLC's Dividend Yield and Growth
As of today, BAE Systems PLC currently has a 12-month trailing dividend yield of 2.50% and a 12-month forward dividend yield of 2.67%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, BAE Systems PLC's annual dividend growth rate was 4.20%. Extended to a five-year horizon, this rate decreased to 3.40% per year. And over the past decade, BAE Systems PLC's annual dividends per share growth rate stands at 2.70%.
Based on BAE Systems PLC's dividend yield and five-year growth rate, the 5-year yield on cost of BAE Systems PLC stock as of today is approximately 2.95%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, BAE Systems PLC's dividend payout ratio is 0.43.
BAE Systems PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BAE Systems PLC's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. BAE Systems PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and BAE Systems PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BAE Systems PLC's revenue has increased by approximately 5.60% per year on average, a rate that outperforms approximately 60.23% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, BAE Systems PLC's earnings increased by approximately 3.10% per year on average, a rate that outperforms approximately 46.41% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.00%, outperforms approximately 64.17% of global competitors.
Next Steps
Given BAE Systems PLC's consistent dividend payments, solid growth rate, reasonable payout ratio, high profitability, and robust growth metrics, it appears to be a promising dividend stock. However, investors should always consider their individual risk tolerance and investment goals before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
