The FTSE 100-listed BAE Systems PLC (GB:BA) provides an opportunity for investors to earn stable dividends and diversify their portfolios. This dividend aristocrat has maintained its dividend for 30 consecutive years and remains an attractive pick for income investors. In terms of share price appreciation, analysts are moderately bullish on the stock. In 2023, the stock gained around 30% in trading.
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BAE Systems is a British manufacturer and supplier of aerospace and defense products. The company has a global presence in around 40 countries.
BAE Systems’ Dividend History
The current dividend yield of the stock is 2.25% compared to its industry average of 1.64%. In 2023, the company paid an interim dividend of 11.5p per share in November. This was 10.5% above the interim payment for 2022.
The company’s annual dividend has grown from 8.0p per share in 1999 to 27.0p in 2022.
Robust Outlook
The ongoing geopolitical challenges around the world have put the focus on defence stocks. The growing defense spending by governments bodes well for BAE Systems’ long-term earnings prospects, considering its stronghold on specialized military equipment.
For the first half of 2023, the company’s sales grew by 11%. As of June 2023, the company’s order backlog was £66.2 billion, which further provides visibility into future earnings.
For the full year, BAE Systems revised its guidance for earnings growth to a range of 10% to 12%, an increase from the earlier forecast of 5% to 7%. Additionally, it raised the anticipated sales growth outlook range from 3% to 5% to 5% to 7%.
The robust earnings outlook makes a strong case for the company’s dividend as well. According to Citi, dividends are expected to grow to 32p per share in 2023 and 2024 and further increase to 34.9p in 2025.
Is BAE Systems Stock a Buy?
According to TipRanks, BA stock has received a Moderate Buy consensus rating based on five Buys, two Holds, and one Sell recommendation. The BAE Systems share price target is 1,250.0p, which indicates a 7% growth on the current price level.
