BAE – Strong Results Support Dividend Hike

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BAE – Strong Results Support Dividend Hike

BAE Systems plc (LON:BA)’s underlying sales of £10bn were up 6% at constant exchange rates (CER). That reflected growth across all segments. Underlying operating profits were up 27% at CER to £1bn, with underlying earnings-per-share (EPS) of 21.9p.

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Q2 2021 hedge fund letters, conferences and more

Taking the impact of currency headwinds into account, the group expects full year sales growth between 3% and 5% and profit growth of 6% to 8%. EPS are seen increasing between 3% and 5%, and the group plans to deliver over £1bn in operating free cash flow.

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The interim dividend rose 5.3% to 9.9p. The board also approved a £500m buyback programme, set to begin immediately.

The shares were up 2.1% following the announcement.

BAE Rewards Shareholders With A 5% Dividend Hike

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“BAE is rewarding shareholders for sticking out the uncertainty that came with operating through a pandemic with a 5% dividend hike and £500m buyback programme. The group fared better than most, maintaining its dividend and keeping debt in check, but the crisis dented demand for some of its commercial products which ultimately hit cash flow.

It seems the group is well on the road to recovery, though, with free cash back in the black and impressive profit growth of 27%, excluding the impact of currency headwinds. While BAE is primarily a defence play, the uptick in air travel will help the group build upon its strength—its commercial flight control business continued to suffer under the weight of travel restrictions and will offer a welcome tailwind as it things return to normal

With worries about a recession and cuts to defence spending budgets firmly off the table for now, we’re expecting BAE to continue gaining momentum and delivering shareholder returns in both the medium and long-term."


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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