Northrop Grumman Rewards Shareholders With 12% Dividend Hike

Northrop Grumman Corp. NOC recently announced that its board of directors has approved a 12.1% hike in its quarterly dividend to $2.31 per share, marking its 22nd consecutive annual dividend hike. The revised quarterly dividend is payable on June 18, 2025, to shareholders of record at the close of business on June 2.

Following the recent hike, Northrop Grumman will now pay annual dividend of 9.24 per share. This represents an annual dividend yield of 1.94% based on its share price worth $476.60 as of May 20.

NOC’s annualized dividend yield is higher than the Zacks S&P 500 composite’s yield of 1.24%. This signifies Northrop Grumman’s strength in the business to generate enough cash flow to reward shareholders with improved dividend payouts.

Can Northrop Grumman Sustain Dividend Hikes?

A solid cash distribution strategy is generally buoyed by the steady performance of a company in generating meaningful cash flows from its operations. To this end, it is imperative to mention that Northrop Grumman generated a solid cash flow from operating activities worth $481 million during the first quarter of 2025, which, in turn, must have enabled it to sanction the latest dividend hike.

A stable cash flow from operations also allows a company to undertake other shareholder-friendly actions like share repurchases. Notably, in the first quarter, NOC repurchased shares worth $480 million.

Looking ahead, we may expect this defense prime to continue rewarding its shareholders with stable dividend hike movements, backed by its business strength. For a defense contractor like NOC, business strength lies in the orders that it receives, which convert into a robust backlog and thereby bolster the company’s future revenue and cash flow generation prospects. Notably, NOC exited first-quarter 2025 with a record backlog of $92.80 billion.

Northrop Grumman expects to generate sales in the range of $42.00-$42.50 billion for 2025, suggesting an increase of 3.6% from the prior-year reported figure. This upside in sales and consequent expected cash flow generation should allow the company to fund notable dividend hikes in the days ahead.

Peer Moves

Here are some other defense companies that have also awarded their shareholders with impressive dividend hikes.

General Dynamics GD: In March 2025, the company announced that its board of directors had approved a 5.6% increase in the quarterly dividend rate. Its revised quarterly dividend will be $1.50 per share.

GD boasts a long-term (three to five years) earnings growth rate of 10%. The Zacks Consensus Estimate for GD’s 2025 sales is pinned at $50.47 billion, indicating year-over-year growth of 5.8%.

Howmet Aerospace HWM: In January 2025, the company’s management approved a dividend hike to 10 cents per share. This indicates a 25% hike from the previous quarter’s dividend of eight cents.

HWM boasts a long-term earnings growth rate of 19%. The Zacks Consensus Estimate for HWM’s 2025 sales is pinned at $8.06 billion, indicating year-over-year growth of 8.5%.

L3Harris Technologies LHX: In February 2025, the company announced that its board of directors had approved a 3.4% increase in the quarterly dividend rate. Its revised quarterly dividend is now $1.20 per share.

LHX has a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for LHX’s 2025 sales is pinned at $21.53 billion, indicating year-over-year growth of 1%.

NOC’s Price Performance

In the past three months, shares of Northrop Grumman have risen 5.9% compared with its industry‘s growth of 13.1%.

NOC’s Zacks Rank

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research