Honeywell's Dividend Appeal Lies in Future Growth, Not Just Today's Yield

Honeywell International Inc. (NASDAQ:HON) is among the best next generation dividend aristocrat stocks.

In recent years, the company has faced setbacks, struggling to translate promising opportunities in automation, the industrial Internet of Things, aerospace, and the energy transition into significant revenue or profit growth. However, the outlook appears more encouraging moving forward.

Honeywell International Inc. (NASDAQ:HON)’s largest division is its aerospace segment, which supplies parts, components, control systems, and integrated solutions to both commercial aviation and the defense sector. Notably, the company also operates a $5 billion quantum computing business.

One of Honeywell International Inc. (NASDAQ:HON)’s standout strengths is its solid balance sheet. It has increased its dividend 15 times over the past 14 consecutive years. According to its 2025 proxy statement, the company has strategically deployed $14.6 billion across mergers and acquisitions, capital investments, share buybacks, and dividend payments to strengthen its portfolio and enhance shareholder returns.

In addition, the company’s strong cash flow provides solid backing for its dividend payments. In the first quarter of 2025, it reported operating cash flow of $600 million and free cash flow of $300 million—a 61% increase from the previous year. Its free cash flow margin of 13% further highlights a positive outlook.

Looking ahead to full-year 2025, Honeywell International Inc. (NASDAQ:HON) projects operating cash flow between $6.7 billion and $7.1 billion, with free cash flow expected to range from $5.4 billion to $5.8 billion.

The company offers a quarterly dividend of $1.13 per share and has a dividend yield of 2.02%, as of June 14.

While we acknowledge the potential of HON as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure. None.