Northrop Grumman Raises Quarterly Dividend 6.9% to $2.47

Northrop Grumman Corporation raised its quarterly dividend 6.9% to $2.47 per share from $2.31. Shares traded ex-dividend on June 1, 2026, and the increase lifts the annual dividend to $9.88 per share. The higher rate was maintained for the August 31, 2026, ex-dividend date.

Why the dividend changed

Northrop Grumman described the increase as part of a disciplined capital-allocation strategy that gives priority to manufacturing capabilities and capacity. The company is expanding production infrastructure to deliver defense technologies while continuing shareholder distributions, according to its dividend announcement. The change was a regular annual increase, not the result of a stock split, merger or spinoff.

Operating momentum and a large order book provide context for the board’s decision. In its latest reported quarter, Northrop Grumman said sales rose 5% to $10.9 billion and net awards of $20 billion lifted backlog to a record $105 billion. The company increased its full-year sales and adjusted earnings guidance while reaffirming adjusted free-cash-flow guidance of $3.1 billion to $3.5 billion, according to its second-quarter results.

Cash generation must also support rising investment requirements. Management said capital deployment remains focused on growth and capacity, including additional investment for the B-21 production ramp. Northrop Grumman expects $1.85 billion of capital expenditures in 2026 while retaining its adjusted free-cash-flow outlook, according to its first-quarter earnings call. Its latest quarterly filing identifies working capital, contractual obligations, pensions, capital spending and shareholder returns as competing uses of liquidity. The company reported $2.3 billion of cash and equivalents at the end of the second quarter and no borrowings under its credit facilities, according to the second-quarter Form 10-Q.

Dividend track record

The increase extends Northrop Grumman’s dividend-growth streak to 43 consecutive years. The full-year payment rose from $5.67 per share in 2020 to $8.99 in 2025, with increases recorded in every intervening year. The annual total increased 8.6% in 2021, 9.7% in 2022, 8.6% in 2023, 9.7% in 2024 and 11.7% in 2025. No past annual cut is recorded.

Recent quarterly payments show a consistent midyear reset. The rate was $2.06 for the March 3, 2025, ex-dividend date, increased to $2.31 for June 2, 2025, and remained at that level through February 23, 2026. The new $2.47 rate then applied on June 1, 2026, and August 31, 2026. The pattern indicates that the board has paired one annual increase with otherwise stable quarterly payments rather than changing the distribution throughout the year.

Is the dividend covered?

The dividend consumes 30% of earnings, leaving a substantial portion available for operations, investment and other capital needs. That earnings payout ratio provides a wider cushion than a distribution that absorbs most reported profit, although accounting earnings and cash generation can diverge during periods of heavy investment.

SmarterDividends rates the dividend A with a safety score of 94. That grade means the payout is considered very safe within the scoring framework, whose top category covers scores from 80 to 100. The rating is consistent with the modest earnings payout, uninterrupted growth record and continued quarterly payments at the higher rate. It does not remove execution risks associated with large defense programs or the company’s manufacturing investments.

Yield and valuation

At a share price of $517.64, Northrop Grumman’s forward dividend yield is 1.92%, compared with the Industrials sector median of 1.61%. The stock therefore offers a higher forward income rate than the sector benchmark, though the difference is limited and the yield remains below 2%.

SmarterDividends estimates fair value at $349.87 and classifies the shares as overvalued. That estimate is 34% below the $517.64 share price. The company’s market value is $73.5 billion. The valuation assessment is separate from dividend safety: a well-covered payout can coexist with a share price above an estimated fair value.

What to watch

The next scheduled operating update is Northrop Grumman’s third-quarter results and earnings call on October 20, 2026, according to the company’s investor-relations calendar. Investors can monitor whether sales growth, program execution and cash collection remain consistent with the reaffirmed adjusted free-cash-flow guidance.

Capital requirements are another focal point. Northrop Grumman is funding manufacturing expansion for the B-21 ramp while supporting other large programs, including Sentinel. Future dividend coverage will depend on converting the record backlog into cash while meeting those investment needs. The board’s next dividend declaration will also show whether the $2.47 quarterly rate remains in place after its first two payments at the new level.