General Dynamics Rewards Investors With 9.7% Dividend Hike

General Dynamics Corporation GD announced that its board of directors has approved a 9.7% hike in its quarterly common stock dividend. This has taken the annualized payout to $4.08 per share.

About the Dividend Hike

The raised dividend of $1.02 per share compares favorably with the prior payment of 93 cents. The new dividend will be paid on May 10, 2019, to its shareholders on record at the close of business on Apr 12.

We note that annual dividend hikes have been a systematic trait of this defense major. The latest hike will mark the 22nd consecutive annual dividend hike approved by General Dynamics’ board.

The current annualized dividend yield is 2.45% compared with the industry average of 0.94%. The increase in distributable income highlights the company’s profitably implemented investment growth strategy.

General Dynamic’s Financials

General Dynamics maintains a flexible liquidity position owing to the solid performance of its diverse defense offerings. As of Dec 31, 2018, the company’s cash and cash equivalents totaled approximately $1 billion. In 2018, its cash inflow from operating activities was around $3.2 billion. Free cash inflow from operations last year was $2.5 billion.

We believe that this Falls Church, VA-based company’s strong cash flow and organic growth will help it to generate sufficient funds for meeting financial commitments including higher dividend payments. Last year, the company paid dividends worth $1.1 billion. Moving ahead, General Dynamics is anticipated to pay similar dividend hikes or even higher to its shareholders.

Price Movement

Shares of General Dynamics have declined 3.9% in the past three months.

Zacks Rank & Stocks to Consider

General Dynamics currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are The Boeing Company BA, Spirit Aerosystems Holdings SPR and Heico Corporation HEI. While Boeing and Spirit Aerosystems sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing delivered average positive earnings surprise of 17.08% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 11.3% north to $20.13 over the past 90 days.

Spirit Aerosystems’ long-term growth rate is estimated at 7.80%. The Zacks Consensus Estimate for 2019 earnings has climbed 2.47% to $7.47 over the past 90 days.

Heico Corporation’s long-term growth rate is projected at 12.10%. The Zacks Consensus Estimate for 2019 earnings has moved 4% north to $2.08 over the past 90 days.

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