Last Update 3/10/25
KBR, Inc. (NYSE: KBR) is a global engineering and technology solutions company, best known for its work in government services, infrastructure, and energy. Originally part of Halliburton before spinning off as an independent company, KBR has grown into a key player in the defense and space sectors, securing large contracts with government agencies and private corporations.
For investors, KBR presents an interesting mix of moderate dividends, strong cash flow, and long-term growth potential. While it’s not a traditional high-yield dividend stock, it has a solid track record of returning value to shareholders while continuing to invest in its business. Let’s take a closer look at what KBR has to offer for dividend investors.
Key Dividend Metrics
💰 Forward Dividend Yield: 1.27%
📈 5-Year Average Dividend Yield: 1.06%
💵 Annual Dividend Payout: $0.66 per share
📊 Payout Ratio: 21.51% (plenty of room for future increases)
🗓 Ex-Dividend Date: March 14, 2025
💸 Dividend Date: April 15, 2025
🚀 Dividend Growth Rate: Steady, but not rapid
Dividend Overview
KBR isn’t known for delivering sky-high yields, but it does offer a steady dividend that complements its overall business growth. With a forward dividend yield of 1.27%, it falls on the lower end compared to traditional income stocks. However, the company’s ability to grow earnings while keeping its payout ratio at just over 21% means there’s room for future increases.
What’s important to note is KBR’s approach to dividends. It’s not just about returning cash to shareholders but about maintaining financial flexibility to reinvest in areas like technology, defense, and energy solutions. That’s a crucial factor for long-term investors who want both dividend stability and stock price appreciation.
Dividend Growth and Safety
One of the most appealing aspects of KBR’s dividend is its reliability. The company has shown a commitment to increasing payouts, and with a payout ratio sitting at just 21.51%, there’s plenty of room for more growth. The financials back this up, with strong free cash flow supporting dividend payments while still allowing for reinvestment in operations.
The company’s free cash flow generation is particularly encouraging. KBR reported $462 million in operating cash flow and $384 million in levered free cash flow, which are healthy numbers that suggest dividends are well-covered.
Factors supporting dividend safety:
- Payout ratio is low, meaning earnings easily cover the dividend
- Free cash flow is strong enough to support continued payouts
- A stable business model with government contracts provides revenue consistency
With these strengths in place, there’s no immediate concern about the dividend being cut. In fact, there’s potential for it to increase over time, though don’t expect rapid growth in this area.
Chart Analysis
Price Action and Moving Averages
KBR’s price has been in a clear downtrend over the past several months. After peaking above 70, the stock started to roll over, breaking below both the 50-day and 200-day moving averages. The 50-day moving average has been sloping downward for some time, recently crossing below the 200-day moving average, signaling a death cross—a bearish technical indicator that often points to prolonged downside momentum.
Right now, the stock is attempting to recover from a recent low around 47. It has bounced back to 51.84, but it remains well below both moving averages, which are acting as resistance levels. If KBR can sustain this recent move, the next big test will be whether it can reclaim the 50-day moving average, currently trending downward.
Volume and Market Participation
Looking at volume, there has been an increase in activity around key turning points. Notice the high selling volume in December when the price broke down sharply, confirming that institutional investors likely participated in the move lower. More recently, there’s been an uptick in buying volume, suggesting that some traders are stepping in at lower prices. However, the volume isn’t overwhelmingly strong, meaning this bounce may not yet have broad conviction behind it.
A decisive move higher with significantly stronger volume would indicate that real buyers are stepping in, rather than just a temporary relief rally. If volume starts to fade while the price remains weak, it could be a sign that this rebound won’t have much staying power.
RSI and Momentum
The Relative Strength Index (RSI) at the bottom of the chart shows that KBR was in oversold territory not too long ago. It dipped below 30, which often signals that selling pressure has been overdone. Since then, RSI has climbed back up, but it’s still in the lower half of the range, suggesting that momentum remains weak.
For a real shift in trend, RSI would need to push toward 50 and ideally break above it. Right now, the stock is recovering, but it hasn’t fully regained strength. If RSI starts to stall out below 50, it could indicate that this is just a short-term bounce within a larger downtrend.
Recent Candle Action and Buying Pressure
The last few candles on the chart suggest some early signs of buying interest. The most recent candle shows a solid green close, meaning buyers stepped in after an intraday pullback. The fact that the stock opened at 49.71, hit a high of 52.03, and then closed at 51.84 suggests some strength, but it’s not a runaway rally.
If this pattern continues with higher lows and stronger closes, it would indicate growing confidence among buyers. However, if the next few sessions see selling pressure return, it could mean that resistance is still too strong to break through.
Analyst Ratings
Upgrades:
📈 KeyBanc: On January 10, 2024, KeyBanc resumed coverage of KBR with an Overweight rating and a price target of $63. The positive stance was based on expectations that KBR’s Sustainable Technology Solutions (STS) segment will gain more market recognition, leading to stronger revenue growth and higher profitability.
📊 UBS Group: On October 30, 2024, UBS Group raised its price target for KBR from $77 to $78, maintaining a Buy rating. This adjustment reflected a positive outlook on the company’s growth potential, particularly within its defense and government contracting segments, which continue to secure long-term deals.
Downgrades:
⚠️ TD Cowen: On January 8, 2025, TD Cowen lowered its price target for KBR from $72 to $64 and assigned a Hold rating. The downgrade stemmed from concerns about valuation risks and potential headwinds in KBR’s end markets, particularly in areas affected by economic uncertainty and government budget constraints.
📉 Goldman Sachs: On February 26, 2025, Goldman Sachs reduced its price target for KBR from $75 to $64, maintaining a Buy rating. The revised target reflected a reassessment of near-term growth expectations, as analysts pointed to slower-than-expected contract ramp-ups and macroeconomic pressures that could impact revenue in the short term.
Consensus Price Target:
📍 As of the latest data, the 12-month consensus price target for KBR stands at approximately $75.88, suggesting a potential upside of around 46.16% from the current share price.
These mixed analyst opinions highlight the dynamic nature of KBR’s market position. Some analysts remain bullish, citing strong business segments and contract wins, while others take a more cautious approach, considering valuation concerns and economic factors that may challenge growth in the near term.
Earnings Report Summary
KBR, Inc. recently released its latest earnings report, and there’s a lot to unpack. The company posted strong revenue growth, solid profitability, and key strategic moves that are shaping its future. Investors have been keeping a close eye on how KBR is navigating the current market, and from the numbers, it looks like the company is maintaining a steady upward trajectory.
Strong Revenue Growth
For the quarter, KBR reported $2.1 billion in revenue, marking an impressive 23 percent increase year-over-year. That kind of growth doesn’t happen by accident. It’s the result of a mix of strong government contracts, demand for sustainable technology solutions, and well-executed business strategies. This momentum has carried through the full year, setting up KBR for even more gains ahead.
Earnings and Profitability
The company pulled in $76 million in net income, showing that not only is revenue climbing, but profits are also keeping pace. Adjusted EBITDA came in at $228 million, with a margin of 11.2 percent, which is slightly better than last year. Earnings per share landed at $0.91, beating expectations and giving investors more confidence in the company’s financial health.
Business Segments Performing Well
- Government solutions: As expected, this segment continues to be KBR’s backbone. The company secured new contracts and maintained steady revenue from ongoing defense and infrastructure projects.
- Sustainable technology solutions: This area was a standout, with 30 percent revenue growth in the quarter. Over the full year, the segment grew by 17 percent, which shows that KBR’s investments in sustainability and innovation are paying off.
Strategic Moves Paying Off
KBR made some big moves this quarter to strengthen its long-term position. The acquisition of LinQuest adds serious firepower to its defense and intelligence capabilities, with an expected 400 million dollar revenue boost in 2025. The HomeSafe program, a key initiative in logistics and relocation services, is also ramping up and could add another 300 to 500 million dollars in revenue.
Looking Ahead
KBR is expecting 2025 revenue to land between 8.7 billion and 9.1 billion dollars, which would mean about 15 percent growth at the midpoint. Adjusted EBITDA is forecasted between 950 million and 990 million dollars, showing that management is confident about maintaining profitability while expanding its footprint.
The latest report paints a picture of a company that’s executing well, growing at a healthy pace, and making smart strategic decisions. With strong business segments and new revenue streams kicking in, KBR is positioning itself for another strong year.
Financial Health and Stability
Looking beyond dividends, KBR’s financial health is a mix of strengths and challenges. On one hand, it generates strong revenue and cash flow, with quarterly revenue growth hitting 22.7% year-over-year. On the other, it carries a significant amount of debt, which is worth keeping an eye on.
The company holds $350 million in cash, but its total debt sits at $2.87 billion, resulting in a debt-to-equity ratio of 195.71%. That’s high and suggests a level of financial leverage that could become problematic if cash flow weakens. However, with a current ratio of 1.05, KBR appears to have enough short-term liquidity to meet obligations.
From a profitability standpoint, the company is performing well. A profit margin of 4.84% and an operating margin of 6.03% indicate solid cost control. More impressively, the return on equity (ROE) is 26.63%, showing that management is putting shareholder capital to efficient use.
Key financial takeaways:
- Strong cash flow supports dividends and reinvestment
- High debt levels are a concern, but manageable with current cash flow
- Growing revenue adds stability and long-term potential
Valuation and Stock Performance
KBR’s stock is currently trading at $51.16 per share, reflecting a 1.31% decline on the day and an additional 1.62% drop in after-hours trading. Over the past year, shares have ranged between $47.16 and $72.60, suggesting some volatility but also potential upside if the stock rebounds.
From a valuation perspective, KBR appears reasonably priced. Its trailing price-to-earnings (P/E) ratio stands at 18.58, which is in line with industry averages. More importantly, its forward P/E ratio is 13.57, which suggests that earnings growth could make the stock more attractive at current levels.
Other valuation metrics include:
- Price/Sales Ratio: 0.90, indicating a relatively inexpensive valuation
- Enterprise Value/EBITDA: 11.70, suggesting fair valuation compared to earnings
One notable factor is the stock’s technical positioning. KBR is trading below both its 50-day moving average of $54.66 and its 200-day moving average of $62.20, which could indicate continued weakness in the short term. However, long-term investors might see this as an opportunity to accumulate shares at a discount.
Risks and Considerations
While KBR has a solid foundation, there are some risks to consider before investing.
- High Debt Load – The company’s 195.71% debt-to-equity ratio is higher than many peers, meaning a significant portion of capital is tied up in debt obligations. If interest rates rise or earnings decline, it could pressure financial flexibility.
- Reliance on Government Contracts – A substantial portion of KBR’s revenue comes from government contracts, which can be unpredictable due to budget cuts, political changes, and shifting priorities. While these contracts provide stable revenue, they are not guaranteed long-term.
- Stock Volatility – The stock has seen wide price swings, which might not appeal to conservative income investors looking for a stable, low-volatility dividend payer. With a beta of 0.87, it is less volatile than the broader market but still experiences fluctuations.
Final Thoughts
KBR, Inc. is a compelling stock for investors looking for a mix of dividend income and long-term growth. While the yield is not particularly high, the low payout ratio and strong free cash flow provide confidence that the dividend is safe and could continue to grow over time.
The biggest concern is the company’s high debt levels, but this is balanced by strong cash generation and a stable government contract business. For those willing to accept some volatility, KBR presents an opportunity to collect dividends while potentially benefiting from stock price appreciation.
It’s not a classic dividend stock, but for those looking beyond high-yield plays, KBR’s combination of growth, stability, and a shareholder-friendly dividend policy makes it a stock worth considering for a well-rounded portfolio.
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