DivGro is now DivGro 2.0!

DivGro moved to another platform and is now DivGro 2.0!

Please enjoy complimentary access to all the content on DivGro 2.0 until I formally launch it! You can sign up for free and join more than 1,100 existing members!

All content will be complimentary until the formal launch of DivGro 2.0. This includes my monthly newsletter and articles like
 How to Assess Dividend Quality and The Chowder Ruleand a live spreadsheet of my DivGro Portfolio.

Read more About DivGro 2.0 ...

Friday, April 22, 2016

Recent Transfer: Raytheon Company

Established in 1922 as the American Appliance Company, today Raytheon Company (NYSE:RTN) is a leading U.S. military contractor, specializing in defense, security and civil markets throughout the world. The company provides state-of-the-art electronics, mission systems integration, cyber security systems, and communications and intelligence systems. It also provides business and special mission aircraft. RTN is headquartered in Waltham, Massachusetts.

RTN is a Dividend Contender with a 12-year streak of dividend increases. The company pays quarterly dividends of 73.25¢ per share in the months of February, May, August and November. At the current share price of $126, the stock yields 2.32%.

I'm busy consolidating several portfolios containing my dividend paying stocks. The process is almost complete with only a couple of positions still to be transferred. Today's transfer is a new position for DivGro, so I now own 62 different stocks and funds.

Since completing the consolidation of my Scottrade and traditional IRA portfolio's, Ive been transferring stocks from my Roth IRA. Here's a summary of Roth IRA stocks transferred so far:
Here is a chart showing my buy prices:


The 2 buys I'm transferring today are connected with red dashed lines. Average cost basis is $107.43, while yield on cost (YoC) averages to 2.31%.

Transactions
2014-01-03  Bought: 11 shares of RTN at $89.35 per share:$982.88
2014-05-01Dividend on 11 shares at 60.5¢ per share:$6.66
2014-08-07Dividend on 11 shares at 60.5¢ per share:$6.66
2014-10-30Dividend on 11 shares at 60.5¢ per share:$6.66
2015-02-05Dividend on 11 shares at 60.5¢ per share:$6.66
2015-04-30Dividend on 11 shares at 67.0¢ per share:$7.37
2015-08-06Dividend on 11 shares at 67.0¢ per share:$7.37
2015-11-12Dividend on 11 shares at 67.0¢ per share:$7.37
2016-02-04Dividend on 11 shares at 67.0¢ per share:$7.37
2016-02-19Bought: 13 shares of RTN at $122.73 per share:$1,595.49
                                                               
 Total Capital Invested $2,578.37

Total Dividends Received:$56.10

With this transfer, DivGro's projected annual dividend income (PADI) increases by $70.32 and I'm adding $56.10 in past dividends to DivGro's total dividend income.

Ratings and Fair Value Estimates for RTN


Following is a table containing updated ratings of RTN from various sources:
 Morningstar Ratings (***--) Credit Rating: A- 
 Dividend.com's DARS Rating  3.4/5 (Neutral)
 TheStreet Ratings Rating  Buy [A]
 The Motley Fool's CAPS Rating  (-----)
 Thomson Reuters StockReport+ (6/10) Neutral 
 S&P Capital IQ Stock Report Hold (***--) Quality Ranking: A 
 Zacks Rank and VGM Style Score 3-Hold (VGM:C)
 Tipranks Analysts Consensus Rating  Moderate Buy
  †combined Value/Growth/Momentum score

Morningstar's fair value estimate of RTN is $119.00, whereas S&P Capital IQ calculates a fair value of $131.60. According to Tipranks, based on 3 ranked analysts offering 12-month price targets for RTN, the average price target is $140.00. Finally, using a Comparative Analysis based on EBITDA, courtesy of finbox.io, RTN has a fair value estimate of $125.66 (see below).

The average of these valuations is $129.06, which means RTN is trading at a discount of about 2% to fair value.


Why RTN?


Here are some reasons why I like RTN:
  1. RTN's 10-year dividend growth rate (DGR) is a solid 11.8%. The company recently increased its quarterly dividend from 67¢ per share to 73.25¢ per share, an increase of 9.33%.
  2. Payout ratio is below 40% and has been consistently below 40% for 10 years.
  3. The company repurchased 9 million shares for $1.0 billion in 2015 and authorized an additional $2 billion in buybacks during Q4 2015. In the past decade, RTN reduced its share count by 34%!
  4. Analysts expect above average sales growth of 4.58%, with key drivers being RTN's Patriot missile defense system. Sales in 2016 are expected to be around $24 billion.
  5. With a diverse and ever-expanding product portfolio, RTN is well-positioned for future growth. Recent acquisitions in the intelligence, information and cyber warfare sector have made the company even more future proof
What do you think of RTN as a dividend growth stock? Please share your thoughts in the comments section below.

2 comments :

  1. An interesting tip for a good stock. A bit pricey stock at 126 a share I guess, but it has a nice dividend history. Thanks for sharing.

    ReplyDelete
    Replies
    1. Yes, you don't get a lot of shares for the dollars you spend -- that's for sure! Right now, RTN seems to be trading just about at fair value. I like buying shares at a discount of at least 5% to fair value, and preferably 10%. So I don't think I'll buy more shares right now!

      Thanks for commenting!

      Delete

Please don't include links in comments. I will mark such comments as spam and the comment won't be published. To make me aware of your blog or website, comment on my Blogrole page instead.

Subscribe to Portfolio Insight and Save!

Use my affiliate link to sign up for a free 14-day, no-obligation trial of Portfolio Insight. No credit card required. If you decide to subscribe during the trial period, you'll receive a 20% discount on the first year's annual subscription price of $330. Please note the 20% affiliate discount does not apply to the monthly rate.