Covered, compounding — defense income at a fair payout. A 1.97% yield on a 50.5% trailing payout is covered with room to spare: $1.25 a quarter, raised from $1.20 in 2026, with 24 years of increases behind it. Half of earnings going out is fuller than a low-payout payer, but the defense backlog and the streak both support the rate.
Key risk: U.S. government budget and contract concentration — the bulk of revenue comes from defense customers, so budget shifts, program delays, or contract losses hit orders before they hit the dividend.
Changes if: The trailing payout pushes past about 65%, or the increase streak breaks. Either would signal the defense cycle, not just the payout, has turned.
- ✓Payout-coverage check: 50.5% of trailing earnings — the $5.00 indicated dividend is covered about twice over by earnings.
- ✓Yield check: 1.97% indicated — $1.25/qtr × 4 at the $253.97 close on Oct. 23, 2026. Real, earned yield for a single stock.
- ✓Dividend growth check: 24 years of increases; the latest step, from $1.20 to $1.25, went ex-dividend Mar. 6, 2026.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.