April 14, 2025 a 02:46 pm
HII: Dividend Analysis - Huntington Ingalls Industries, Inc.
Huntington Ingalls Industries, Inc. has demonstrated consistent dividend growth over the past years, making it an attractive choice for income-focused investors. With a robust dividend history and a moderate payout ratio based on EPS, the company has successfully sustained its dividend payments. However, investors should be aware of the current free cash flow payout ratio as it suggests potential cash flow constraints under significant operating or capital expenditure fluctuations.
📊 Overview
Evaluating Huntington Ingalls Industries' dividend profile reveals a company committed to returning value to its shareholders. Here's a detailed look at its key dividend metrics:
| Metric | Value |
|---|---|
| Sector | Aerospace & Defense |
| Dividend Yield | 3.02% |
| Current Dividend Per Share | 5.23 USD |
| Dividend History | 14 years |
| Last Cut or Suspension | None |
🗣️ Dividend History
A consistent dividend history underscores a company's commitment to returning cash to shareholders, reflecting financial resilience and management's confidence in future earnings. A steady increase in dividends is generally favorable, suggesting robust financial health.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.35 |
| 2024 | 5.25 |
| 2023 | 5.02 |
| 2022 | 4.78 |
| 2021 | 4.60 |
📈 Dividend Growth
Dividend growth measures a company's ability to increase its dividend payments over time, essentially reflecting earnings growth. It is crucial for assessing potential future income. Companies that can consistently grow dividends are often in a strong position to continue doing so.
| Time | Growth |
|---|---|
| 3 years | 4.5% |
| 5 years | 7.78% |
The average dividend growth is 7.78% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
The payout ratio indicates what portion of earnings and free cash flow is being paid out as dividends. A sustainable payout ratio ensures continued dividend payments and potential increases.
| Key figure | Ratio |
|---|---|
| EPS-based | 37.17% |
| Free cash flow-based | 73.53% |
The EPS-based payout ratio of 37.17% is comfortable, indicating that dividends are well-covered by earnings. However, the free cash flow-based ratio of 73.53% suggests less room for flexibility, possibly constraining future dividend growth if cash flows don't improve.
💵 Cashflow & Capital Efficiency
Assessing cash flow and capital efficiency is crucial to understand a company's ability to sustain or grow dividends, fund operations, and invest in growth opportunities.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 5.21% | 6.54% | 0.35% |
| Earnings Yield | 6.26% | 6.57% | 7.39% |
| CAPEX to Operating Cash Flow | 0.37 | 0.30 | 0.93 |
| Stock-based Compensation to Revenue | 0.34% | 0.30% | 0.20% |
| Free Cash Flow / Operating Cash Flow Ratio | 0.63 | 0.70 | 0.07 |
The cashflow stability of HII appears to be fluctuating, with significant variance in cash flow metrics year on year. This inconsistency needs careful monitoring if the dividend is to be sustained or increased.
⚠️ Balance Sheet & Leverage Analysis
An effective balance sheet evaluation requires insight into a company's leverage and solvency which directly impact financial flexibility.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 0.90 | 0.65 | 0.73 |
| Debt-to-Assets | 0.29 | 0.24 | 0.28 |
| Debt-to-Capital | 0.47 | 0.40 | 0.42 |
| Net Debt to EBITDA | 2.28 | 1.73 | 4.82 |
| Current Ratio | 0.95 | 0.95 | 1.01 |
| Quick Ratio | 0.89 | 0.89 | 1.01 |
| Financial Leverage | 3.11 | 2.74 | 2.60 |
HII's stable current and quick ratios indicate sufficient liquidity for short-term obligations, while the leverage ratios suggest a manageable debt level. However, increasing net debt to EBITDA in 2024 raises concerns about the company's ability to keep leverage in check.
💼 Fundamental Strength & Profitability
Analyzing profitability ratios helps assess operational efficiency and the potential for future investment.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 16.60% | 16.64% | 11.79% |
| Return on Assets | 5.33% | 6.07% | 4.53% |
| Margins: Net | 5.42% | 5.95% | 4.77% |
| Margins: EBIT | 7.69% | 8.28% | 4.75% |
| Research & Development to Revenue | 0.37% | 0.31% | 0.00% |
The company remains profitable, with acceptable returns on equity and assets. Nonetheless, declining ROE and net margins in 2024 could suggest pressure on profitability.
📉 Price Development
✅ Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 3 | |
| Payout Ratio | 4 | |
| Financial Stability | 3 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 3 |
Total Score: 29 out of 40
⭐ Rating
Huntington Ingalls Industries, Inc. displays strong dividend characteristics, evidenced by a solid payment history and moderate yield. While certain cash flow and profitability metrics warrant attention, the stock remains a viable option for dividend investors seeking stability. Investors should consider the potential for future dividend adjustments and maintain a close watch on financial health indicators.