On March 19, 2025, Robert W. Baird analyst Peter Arment elevated RTX Corp (NYSE: RTX) from a ‘Neutral’ to an ‘Outperform’ rating, increasing the price target from $136 to $160. This upgrade reflects a growing optimism about RTX’s prospects, particularly in light of anticipated increases in defense expenditures.
Rationale Behind the Upgrade
🚀 Decreasing Headline Risks – Concerns related to RTX’s GTF engines are expected to diminish significantly post-2025, reducing potential headwinds.
🎯 Global Missile Replenishment Cycle – A projected multi-year global missile replenishment cycle is expected to bolster demand for RTX’s missile systems, strengthening its position in the defense sector.
💰 Robust Department of Defense Budgets – Strong and consistent funding from the U.S. Department of Defense underscores a stable revenue stream for RTX, enhancing its financial outlook.
These factors contribute to a more favorable risk-reward profile for RTX, justifying the upgraded rating.
Dividend Fundamentals
💵 Dividend Yield – RTX currently offers a dividend yield of approximately 1.90%.
📈 Annual Dividend – The company disburses an annual dividend of $2.52 per share, with the most recent ex-dividend date in February 2025.
⚖️ Payout Ratio – RTX maintains a payout ratio of 70.99%, reflecting a balanced approach to rewarding shareholders while retaining earnings for growth.
📊 Dividend Growth – With a dividend growth rate of 6.78% over the past year and a consistent history of increases over the last decade, RTX remains a strong dividend payer.
Conclusion
The upgrade by Robert W. Baird underscores a positive outlook for RTX Corp, driven by diminishing operational risks and favorable defense sector dynamics. Coupled with a solid dividend track record, RTX presents a compelling proposition for investors seeking both growth and income opportunities in the aerospace and defense industry.