Will Boeing Restore Its Stock Dividend By 2022? What To Know

seekingalpha2021-07-27

Summary Boeing was hit by two crises, a self-inflicted one, and one that is not the fault of the company. The company is active in an industry with long-term growth tailwinds, but a high debt load ...

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精彩评论

SandDust
2021-07-27
SandDust
Be cautious of recovery
Davidgoh18
2021-07-27
Davidgoh18
Unlikely as Covid still remain
- AshleySpace:
  Agree
- woonws:
  Agree... hard to imagine a dividend anytime soon...

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What To Know\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-27 20:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4441408-boeing-restore-stock-dividend-by-2022><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nBoeing was hit by two crises, a self-inflicted one, and one that is not the fault of the company.\nThe company is active in an industry with long-term growth tailwinds, but a high debt load ...</p>\n\n<a href=\"https://seekingalpha.com/article/4441408-boeing-restore-stock-dividend-by-2022\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BA","symbol_name":"波音","start_time":0,"source_url":"https://seekingalpha.com/article/4441408-boeing-restore-stock-dividend-by-2022","article_id":"1159254919","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1159254919","pubTimestamp":1627389675,"columns":[],"sourceInfo":null,"weMediaInfo":null,"summary":"Summary\n\nBoeing was hit by two crises, a self-inflicted one, and one that is not the fault of the co","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BA":"波音"},"translate_title":"波音会在2022年前恢复股票股息吗？要知道什么","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BA":0.9},"content_text":"Summary\n\nBoeing was hit by two crises, a self-inflicted one, and one that is not the fault of the company.\nThe company is active in an industry with long-term growth tailwinds, but a high debt load will slow down the recovery.\nBA will have to clean up its balance sheet before it will be able to pay out billions a year to its owners again.\n\nAlvin Man/iStock Editorial via Getty Images\nArticle Thesis\nBoeing Company(NYSE:BA)has been a well-liked and attractive dividend growth investment in the past, but its 737 Max issues and the global pandemic have hurt its business considerably in the near term. Boeing was forced to cut its dividend to preserve cash, but thanks to a positive industry outlook, Boeing should eventually get back to generating strong profits. At that point, a resumption of dividend payments seems likely, but investors shouldn't bet on that happening over the next year.\nWhen Did Boeing Pause Dividends?\nBoeing Co's recent issues began a couple of years ago when the Boeing 737 MAX was grounded in early 2019 following two fatal crashes of the model. This led to profitability issues, as revenues were cut down while the company had to spend additional money on fixing its faulty planes. The company did, however, not cut its dividend during that time, despite the fact that profits and cash flows were hurt significantly. This was possible thanks to a healthy balance sheet going into this self-inflicted crisis, but Boeing was eventually forced to cut the dividend in H1 2020 when the pandemic led to additional pressures for the entire aircraft industry.\nBoeing Co thus made its last dividend payment, at $2.055 per share, in early March 2020, and there have not been any dividends declared or paid since then.\nIs Boeing Going To Pay Dividends Again?\nThere is no definite answer to this question, but we can, based on facts we know about the company, try to gauge what the likelihood of a dividend resumption looks like, both for the near term, and the long term.\nFirst, we have to note that Boeing is a company that has proven to be highly interested when it comes to returning cash to the company's owners. In the past, this has happened through a combination of dividends and share repurchases:\nData by YCharts\nBefore 2020, Boeing Company has been paying out billions a year in dividends, and at the same time, the company has also been repurchasing shares at a rapid pace. As we see in the above chart, management paid dividends at an increasing rate, but thanks to strong free cash flows, the company also was able to pay for huge buybacks at the same time. Boeing has regularly raised its dividend, with annual pay increases, which indicates that management saw dividend investors as a shareholder base that was important for them. This indicates, I believe, that Boeing will eventually get back to paying dividends once its financial conditions allow for it, although there is no guarantee for that. Due to the fact that Boeing had been able to invest for growth while paying out billions in the past, it seems very much possible that the company will be able to do the same going at some point in the future. I thus would estimate the likelihood of an eventual dividend resumption as very high, although this does not mean that shareholders will get any dividends in 2021 or 2022. A couple of conditions will likely have to be met before Boeing will think about resuming its dividend payments.\nThe first of these conditions is that BA will have to be profitable and generating free cash flows again, at a rate that will have to be at least close to what we saw before the pandemic. In 2018, Boeing generated earnings per share in the mid-teens range, and since December 2018 was the last time the company announced a dividend hike, it could be true that this profit level is where management feels comfortable to pay out $8 per year, where the dividend stood before the pandemic. It is, right now, not looking like Boeing will get back to earning $15 or $16 per share anytime soon:\nData by YCharts\nBoeing Co will not be profitable this year, and even though the company will likely get back to profitability next year, earnings per share will remain well below pre-crisis levels in the foreseeable future. In 2022, Boeing will earn a little above $5 per share according to the analyst community, while that number will rise to $7.30 in 2023, before climbing to $11.60 in 2025. Even four years from now, the company will thus not be back at pre-crisis levels of profitability -- at least if the analyst community is right. There is, of course, the possibility that Boeing will regain its strength quicker than expected, but I would not necessarily bet on that.\nTwo of the reasons for this slow recovery can be seen in the following chart:\nData by YCharts\nBA's share count has been rising again, reverting some of the impact of past share repurchases, which results in a drag on earnings per share growth, as profits are distributed over a wider amount of shares. On top of that, Boeing's debt load rose massively over the last three years. Boeing entered 2019 with basically no net debt, but due to the 737 MAX issues and the pandemic, its debt load swole to more than $40 billion, net of cash. All this debt comes with interest payments, of course, which is why even in case Boeing's underlying business recovers fully, the company will report lower net profits. The impact of these two factors explains why Boeing is currently not expected to get back to pre-crisis levels of profitability on a per-share basis over the next couple of years, even though the underlying business will, of course, recover going forward.\nThe pandemic will eventually end, and people will fly more again. This, combined with the need to replace older aircraft, is why Boeing should see its underlying business get back to pre-crisis levels, and eventually even above that level, in the future. Investors should not expect earnings per share to hit pre-crisis levels in the near term, however. It thus seems highly questionable whether Boeing's management will start to pay out large dividends in the near term. On top of that, deleveraging and strengthening the balance sheet will likely be priorities in the coming years. Management wanted to operate with a net debt position of close to zero in the past, and it seems highly unlikely that they suddenly decided that they want to operate with dozens of billions of net debt going forward. Instead, management will try to reduce its debt load meaningfully in the coming years, which will require a lot of cash. That cash can then not be spent on shareholder returns, of course, which is why I wouldn't be surprised to see management keep the dividend suspended for a while.\nThere is the option for a dividend at a lower rate, which would allow for more flexibility, but even that seems unlikely over the next year. If Boeing decides to prioritize debt reduction, they could still decide to restart dividend payments at a reduced rate, e.g. $0.50 per share per quarter, in 2023, as this would not eat up a large portion of the company's expected earnings per share. But a pre-crisis level payout of $8+ per share seems highly unlikely in the next couple of years, I believe, due to the aforementioned fact that earnings per share will not recover quickly, and due to the fact that cash will be needed to pay down debt.\nIs Boeing Stock Attractive Right Here?\nBoeing is operating in a duopoly, which allows for compelling margins, its industry is benefitting from long-term growth tailwinds, and there is a huge moat for its business. Those are long-term positives that could make Boeing an attractive investment at the right price. But due to the fact that a full recovery will take several more years, and since Boeing's weak balance sheet will require attention, investors should not count on Boeing as an income investment. Buying today and expecting a full dividend restoration does not seem like an opportune strategy to me, as I believe that there is a high likelihood that investors will not see dividends at the $8 per share level through 2025. I also think that there will not be any dividend declarations at all, even at a lower rate, over the next year.\nLooking at BA's valuation, it should be noted that shares aren't exactly cheap today. At 42x next year's earnings, and at 30x 2023's earnings, Boeing is far from a value pick. Even when we look out to 2025, Boeing is still valued at 19x profits, four years before they have materialized. For a company that will be focused on balance sheet improvement, that is still struggling with profitability today, and that will likely not make any meaningful shareholder payments in the foreseeable future, that is far from cheap I think. I personally do not see BA as an attractive investment at current prices, despite a strong position in a growth industry.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":809791529,"gmtCreate":1627392069161,"gmtModify":1633765466167,"author":{"id":"3581331938298103","authorId":"3581331938298103","name":"SandDust","avatar":"https://static.tigerbbs.com/ea6083d742fc232449a625fb122842c8","vip":1,"crmLevel":6,"crmLevelSwitch":0,"authorIdStr":"3581331938298103","idStr":"3581331938298103"},"htmlText":"Be cautious of recovery&nbsp;","listText":"Be cautious of recovery&nbsp;","text":"Be cautious of recovery","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/809791529","repostId":1159254919,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":809443242,"gmtCreate":1627389815486,"gmtModify":1633765487112,"author":{"id":"3569149523842919","authorId":"3569149523842919","name":"Davidgoh18","avatar":"https://static.tigerbbs.com/71f448e2dc5894b50df2e08bdf98ded4","vip":1,"crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3569149523842919","idStr":"3569149523842919"},"htmlText":"Unlikely as Covid still remain","listText":"Unlikely as Covid still remain","text":"Unlikely as Covid still remain","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":2,"repostSize":0,"link":"https://laohu8.com/post/809443242","repostId":1159254919,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5346806,"gmtCreate":1627390081081,"gmtModify":1635220305521,"authorId":3578886966105998,"author":{"id":3578886966105998,"idStr":"3578886966105998","authorId":3578886966105998,"name":"AshleySpace","avatar":"https://static.tigerbbs.com/86ceb5655988ed5ab92e6a5a06450942","vip":1,"crmLevel":7,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":809443242,"type":1,"supId":0,"prevId":0,"content":"Agree","text":"Agree","html":"Agree"},{"id":5348905,"gmtCreate":1627399256653,"gmtModify":1635220180633,"authorId":3581999478634265,"author":{"id":3581999478634265,"idStr":"3581999478634265","authorId":3581999478634265,"name":"woonws","avatar":"https://static.tigerbbs.com/f26ed1a10ee84ab97229aad191ef3133","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":809443242,"type":1,"supId":0,"prevId":0,"content":"Agree... hard to imagine a dividend anytime soon...","text":"Agree... hard to imagine a dividend anytime soon...","html":"Agree... hard to imagine a dividend anytime soon..."}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":32,"commentSize":2,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1159254919"}