Understanding RTX Corp's Dividend Performance and Sustainability
RTX Corp (RTX, Financial) recently announced a dividend of $0.59 per share, payable on 2024-03-21, with the ex-dividend date set for 2024-02-22. 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 RTX Corp's dividend performance and assess its sustainability.
What Does RTX Corp Do?
RTX Corp (RTX, Financial) is a diversified aerospace and defense industrial company formed from the merger of United Technologies and Raytheon. It boasts a balanced exposure as a supplier to both commercial aerospace manufacturers and the defense market. RTX Corp operates through three main segments: Collins Aerospace, a diversified aerospace supplier; Pratt & Whitney, an aircraft engine manufacturer; and Raytheon, a defense prime contractor that offers missiles, missile defense systems, sensors, hardware, and communications technology to the military.
A Glimpse at RTX Corp's Dividend History
RTX Corp has been a consistent provider of shareholder value through its dividends, maintaining a steady dividend payment record since 1985, distributed quarterly. To better understand the company's commitment to returning value to shareholders, one can examine the historical trends in RTX Corp's annual Dividends Per Share. This data provides a clear picture of the company's dividend performance over time.
Breaking Down RTX Corp's Dividend Yield and Growth
RTX Corp currently boasts a 12-month trailing dividend yield of 2.52% and a 12-month forward dividend yield of 2.56%, which indicates an expectation of increased dividend payments in the upcoming year. Over the past three years, the annual dividend growth rate was 2.40%. However, this growth rate has decreased to -5.60% per year over a five-year period, and the annual dividends per share growth rate over the past decade stands at -1.00%. The 5-year yield on cost for RTX Corp stock is approximately 1.89% as of today.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of RTX Corp's dividend, it is crucial to consider the dividend payout ratio. This metric reveals the proportion of earnings distributed as dividends. RTX Corp's dividend payout ratio is currently 0.81 as of 2023-12-31, which may raise concerns about the sustainability of the company's dividend. However, when assessing the company's financial health, the profitability rank is also a key indicator. With a rank of 7 out of 10, RTX Corp demonstrates good profitability prospects, having reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate strong growth metrics. RTX Corp's growth rank of 7 out of 10 indicates a positive growth trajectory compared to its competitors. Examining the revenue per share and the 3-year revenue growth rate, RTX Corp has experienced an average annual revenue increase of approximately 4.80%, although this underperforms compared to about 50% of global competitors.
Conclusion: Weighing RTX Corp's Dividend Prospects
In conclusion, while RTX Corp has demonstrated a reliable dividend history and offers a fair dividend yield, investors should closely monitor the company's payout ratio and dividend growth rates. The company's strong profitability and growth rank provide some reassurance regarding the future prospects of its dividends. However, the mixed signals from the dividend growth rates and payout ratio suggest that investors should keep an eye on the company's financial performance and strategic initiatives moving forward. For those seeking high-dividend yield opportunities, GuruFocus Premium members can utilize the High Dividend Yield Screener for further research and investment ideas.
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.
