Read This Before Considering L3Harris Technologies, Inc. (NYSE:LHX) For Its Upcoming US$0.85 Dividend

NYSE:LHX) is about to go ex-dividend in just 4 days. This means that investors who purchase shares on or after the 8th of September will not receive the dividend, which will be paid on the 22nd of September.” data-reactid=”28″>Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that L3Harris Technologies, Inc. (NYSE:LHX) is about to go ex-dividend in just 4 days. This means that investors who purchase shares on or after the 8th of September will not receive the dividend, which will be paid on the 22nd of September.

L3Harris Technologies’s next dividend payment will be US$0.85 per share, and in the last 12 months, the company paid a total of US$3.40 per share. Based on the last year’s worth of payments, L3Harris Technologies stock has a trailing yield of around 1.9% on the current share price of $182.94. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for L3Harris Technologies ” data-reactid=”30″> Check out our latest analysis for L3Harris Technologies

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. L3Harris Technologies paid out 55% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 41% of the free cash flow it generated, which is a comfortable payout ratio.

It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

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Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it’s a relief to see L3Harris Technologies earnings per share are up 3.5% per annum over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company’s prospects for future growth.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, L3Harris Technologies has lifted its dividend by approximately 14% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is L3Harris Technologies worth buying for its dividend? Earnings per share growth has been modest and L3Harris Technologies paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. Overall, it’s hard to get excited about L3Harris Technologies from a dividend perspective.