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It looks like L3Harris Technologies, Inc. (NYSE:LHX) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase L3Harris Technologies' shares before the 18th of November in order to be eligible for the dividend, which will be paid on the 3rd of December.
The company's next dividend payment will be US$1.02 per share. Last year, in total, the company distributed US$4.08 to shareholders. Looking at the last 12 months of distributions, L3Harris Technologies has a trailing yield of approximately 1.9% on its current stock price of $220.34. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether L3Harris Technologies can afford its dividend, and if the dividend could grow.
View our latest analysis for L3Harris Technologies
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. L3Harris Technologies paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 37% of its free cash flow in the past year.
It's positive to see that L3Harris Technologies's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, L3Harris Technologies's earnings per share have been growing at 19% a year for the past five years. L3Harris Technologies is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.