Boeing: Inside The Dividend

| About: The Boeing (BA)
This article is now exclusive for PRO subscribers.

Understanding the dividend of a company can be a valuable asset in making an informed decision to invest, stay invested or not to invest.

It is important for an investor to consider the benefits that dividends can offer and how easy it is to include dividend paying stocks in any portfolio. Some of the advantages a quality dividend stock can offer are attractive returns, less volatility and over time can provide increasing yields. These are some aspects that a quality dividend stock can help provide to a portfolio.

In this article, I will be analyzing Boeing's (NYSE:BA), historical dividend payout, earnings per share growth rate, and historical dividend payout ratios. Based on these criteria we should get a good understanding of the history of the dividend and get some estimates of what to expect in the future.

All numbers sourced from Boeing Website and Bloomberg Businessweek.

Over the past 10 years Boeing has had a rich history of dividend payments. Looking back from the year 2002, Boeing has had a steady history of dividend increases. There have been two times over the past 10 years that Boeing has not raised the dividend. In 2003 the company did not raise the dividend as well as in 2010. Both were after a down trend in the economy but over the past 10 years the company has had a steady record of raising its dividend.

Below is a Chart of the dividend payout per year, for Boeing's common shares.

The current dividend payment as of October 28th 2012 for Boeing is $.44 USD per common share. The current expected payout for total 2012 is $1.76. In 2012, a consensus of 25 analysis at Bloomberg Businessweek are states that Boeing to have an EPS of $4.96. As Bloomberg Businessweek is estimating Boeing's 2012 revenue at $81.4 billion, this would give the company a net profit margin of 4.59% and a projected net income of $3.74 billion. This would be strong increase in revenue over 2011 but a slight decrease in the net profit margin over 2011. With an expected dividend payout of $1.76 and an EPS of $4.96, Boeing would have a payout ratio in 2012 of 35.48%.

With a payout ratio of 35.48% or .3548, Boeing should be able to at least maintain its estimated 2012 payout dividend of $1.76. This would be a 3.52% increase over 2011. As the estimated payout ratio is under the company's 10 year historical payout ratio average of .46 or 46%, and analysts predicting sales increasing in 2013 to $87.9 billion, this bodes well for the company to at least be able to maintain it's current dividend moving forward.

Looking forward to 2013, if the company is able to realize estimated sales at $87.9 billion and an estimated EPS of $5.30 this would give the company a payout ratio of 33.20%, based on a $1.76 yearly payout.

Based on analyzing many of the company's financial ratios, Boeing looks to be very strong regarding its financial health. There are some concerns over the amount of liabilities moving forward as mentioned in my article Analyzing The Debt And Risk Of Boeing, but looking at the information provided in that article, as well as my other articles Boeing: Inside The Numbers and Boeing: Profitability Analysis, the company should be able to maintain its current dividend of $0.44 and if estimates continue as expected, Boeing could potentially support a modest dividend increase in 2013.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.