Northrop Grumman Company Profile

Northrop Grumman (NYSE:NOC) is an American defense technology and aerospace company that is based out of Virginia. The company’s roots can be traced back to when the Northrop and Grumman Corporations were created in 1939 and 1930 respectively. The actual merger between the two companies did not take place until 1994. Today, Northrop Grumman is a weapons and defense giant with a market capitalization of roughly $75 billion and was the 101st largest company on 2022’s Forbes Fortune 500 list.

In terms of operations, Northrop Grumman operates in every imaginable segment of defense and military. These include air, space, cyber, land, sea, multi-domain, and advanced weapons. Although its primary client is the United States, it also has global operations in focus countries like Japan, Australia, South Korea, and the Middle East. Northrop Grumman manufactures some of the most cutting edge military vehicles in the world including the B-2 Spirit Stealth Bomber and the E-2D Advanced Hawkeye.

The company has countless divisions of products and military and defense services. From autonomous unmanned vehicles to directed energy laser solutions to using cyber technology to predict a potential attack, Northrop Grumman is one of the most important companies in America. It has even teamed up with NASA for space exploration and global security and defense projects including the James Webb space telescope.

Northrop Grumman Dividend History

The defense industry is a lucrative one and similar to rivals like Boeing (NYSE:BA), Raytheon Technologies (NYSE:RTX), Lockheed Martin (NYSE:LMT), and General Dynamics (NYSE:GD), Northrop Grumman sees a high level of cash flow. In fact, in 2021 the company saw $35.7 billion in total sales and $3.6 billion in operating cash flow. This is a good thing for shareholders because it allows the company to reward them with a healthy dividend payment.

Currently, Northrop Grumman pays out an annualized dividend yield of 1.43% which pays out on a quarterly basis. The yield is lower than the average yield in the S&P 500 although the company has steadily raised the dividend over time. In 2021, Northrop Grumman returned an estimated $4.7 billion to shareholders through both dividends and share buybacks. Despite the challenging environment, the company raised its dividend by 8.0% which was the 18th consecutive annual dividend increase. Oftentimes it is this strength that is more important to a dividend than the yield itself.

Is Northrop Grumman a Good Investment?

Given the recent market volatility, defense stocks have held up as one of the strongest recession-proof industries. So far in 2022, NOC stock has returned 25.46% and 33.26% over the past twelve months. This has far outperformed the S&P 500 and Dow Jones Index over that period and this growth does not include dividend reinvestment. Don’t be fooled by the lower dividend yield, Northrop Grumman is a strong cash flow company that ensures its shareholders are rewarded. With 18 consecutive years of dividend growth, Northrop Grumman is on its way to becoming a dividend aristocrat by the end of the decade.

-- Abdul Alim - 2022-09-30

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Northrop Grumman Company Profile