Northrop Grumman Just Hiked Its Dividend, But Its Stock Has Tanked - Time to Buy NOC?

Northrop Grumman Corp. ( NOC ) , the defense company, just hiked its annual dividend rate by almost 7%. This was based on its strong free cash flow (FCF) guidance. But NOC stock is down over 26% from its peak and well below its average historical yield.

Value investors like this and are shorting out-of-the-money (OTM) nearby expiry puts to set a lower buy-in point for an even higher yield. This article will show how this works.

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NOC closed at $563.68 on Friday, May 29. That's down 26.6% from its recent spike to $768.02 on March 2 (i.e., down $204.34 over the past 3 months or 88 days). In addition, NOC is back to where it stood before the Iran war and also its recent dividend hike.

Moreover, if tensions heat up again in the Iran war, as is clearly possible, NOC stock could turn around.

However, even if this doesn't happen, value investors believe NOC stock could rise 13% to 14%. That's based on its historical yield. Let's look at that point.