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What are we looking for?

Sustainable dividends from top firms powering the resurgent space industry.

The screen

On Monday, NASA’s unmanned Orion capsule, part of its Artemis I mission, passed within 130 kilometres of the lunar surface. That was the nearest approach to the moon for a spacecraft capable of carrying humans since Apollo 17, which launched 50 years ago this week.

The Artemis mission is a key step for NASA, laying the groundwork for humankind’s visit to Mars. Still, it’s but one element of today’s multifaceted space industry – as focused on commercial and military applications as it is on exploration.

Major space player Boeing suspended its dividend in 2020, and Elon Musk’s SpaceX has yet to trade publicly. Nonetheless, there are lots of ways to invest in space for dependable dividends.

Our search focused on dividend-paying Canadian and U.S. companies with growing space divisions. We then applied our TSI Dividend Sustainability Rating System to those with the most attractive prospects for growth. Our system awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow to cover dividends;
  • One point if the company’s an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

U.S.-listed companies with growing space divisions

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. (US$ Bil.)1Y Ttl. Rtn. (%) Recent Price (US$)
1Lockheed Martin Corp.LMT-NHighest102.5126.841.9481.20
2General Dynamics Corp.GD-NHighest102.068.223.5246.21
3Raytheon Technologies Corp.RTX-NAbove Average92.2145.116.599.04
4Northrop Grumman Corp.NOC-NAbove Average91.381.949.0540.21
5L3Harris Technologies Inc.LHX-NAverage72.141.71.5217.91
6Leidos Holdings Inc.LDOS-NAverage71.315.020.8108.50
7Maxar Technologies Inc. MAXR-NAverage60.21.8-14.524.13

 Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated seven stocks.

Virginia-based Leidos Holdings was awarded a US$2.5-billion contract last year to support NASA’s telecom, cloud and data centre services across all of its facilities. Raytheon Technologies Corp., which recently moved its corporate headquarters to Virginia from Massachusetts, makes satellite command-and-control systems as well as spacecraft components. Lockheed Martin Corp., based in Maryland, is an industry giant that makes a range of satellites and space transportation systems. It is also the lead contractor for Orion. Colorado-based Maxar Technologies Inc. pays only a small dividend, but the satellite and space services provider keeps winning space contracts. These include work on key elements of NASA’s Gateway orbiting lunar space station. L3Harris Technologies Inc., headquartered in Florida, provides technology for diverse defence and commercial applications. It has worked with NASA for more than 60 years, most recently supplying advanced avionics for the Space Launch System (SLS) rocket propelling Orion to the moon. Virginia’s General Dynamics Corp. offers an array of satellite and space products, including key communications links for NASA’s Mars Perseverance rover landing as well as Orion. Meanwhile, Northrop Grumman Corp., also headquartered in Virginia, is a key partner in NASA’s Artemis moon-landing program and more.

We advise investors to do additional research on any investments we identify here.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.