Exploring the Dividend Performance and Sustainability of Honeywell International Inc
Honeywell International Inc (HON, Financial) recently announced a dividend of $1.08 per share, payable on December 1, 2023, with the ex-dividend date set for November 8, 2023. As investors anticipate this forthcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Using data from GuruFocus, we will delve into Honeywell International Inc's dividend performance and assess its sustainability.
What Does Honeywell International Inc Do?
Founded in 1885 by Albert Butz, Honeywell International Inc has evolved into a global conglomerate with a large installed base of equipment. The company operates across four business segments: aerospace, building technologies, performance materials and technologies, and safety and productivity solutions. Recent years have seen Honeywell undergo several portfolio changes, including the addition of Intelligrated in 2016 and the spinoffs of Garrett Technologies and Resideo in 2018. In 2019, Honeywell launched Forge, an enterprise performance management software solution that leverages the firm's domain expertise in buildings, airlines, and critical infrastructure.
A Glimpse at Honeywell International Inc's Dividend History
Since 1986, Honeywell International Inc has consistently paid out dividends on a quarterly basis. Furthermore, the company has increased its dividend each year since 1992, earning it the status of a dividend aristocrat, a title reserved for companies that have consistently raised their dividends for at least 31 consecutive years.
Breaking Down Honeywell International Inc's Dividend Yield and Growth
As of today, Honeywell International Inc boasts a 12-month trailing dividend yield of 2.19% and a 12-month forward dividend yield of 2.30%, indicating an expected increase in dividend payments over the next year.
Over the past three years, Honeywell International Inc's annual dividend growth rate was 5.70%. This rate rose to 7.60% per year when extended to a five-year horizon. Over the past decade, the company's annual dividends per share growth rate stands at an impressive 10.60%. Consequently, based on Honeywell International Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Honeywell International Inc stock as of today is approximately 3.16%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio of Honeywell International Inc is 0.51 as of September 30, 2023, offering insight 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.
Honeywell International Inc's profitability rank, as of September 30, 2023, is 8 out of 10, indicating 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
Honeywell International Inc's growth rank of 8 out of 10 suggests a promising growth trajectory relative to its competitors. However, Honeywell International Inc's revenue per share and 3-year revenue growth rate underperform approximately 63.06% of global competitors, indicating a need for improvement in its revenue model.
Moreover, Honeywell International Inc's 3-year EPS growth rate underperforms approximately 72.63% of global competitors, suggesting that the company needs to enhance its earnings growth to sustain dividends in the long run. The company's 5-year EBITDA growth rate is 18.90%, which underperforms approximately 30.4% of global competitors.
Next Steps
In conclusion, while Honeywell International Inc has a commendable dividend history and yield, its payout ratio and growth metrics suggest that there are areas for improvement. The company's consistent profitability and the steady increase in dividend payments over the years are positive indicators. However, the underperformance in revenue and EPS growth rates compared to global competitors raises concerns about the long-term sustainability of its dividends. Investors should closely monitor these growth metrics to make informed decisions about their investments in Honeywell International Inc.
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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.
