The aerospace and defense sector has turned into one of the market’s steadier income plays this year, with the S&P Aerospace & Defense Select Industry Index ($SIAD) up 27% over the past year. That rally has gone hand in hand with a wave of dividend hikes across the group as companies lean on record backlogs and strong free cash flow to return more cash to shareholders, even with sharp stock swings along the way.
The U.S. aerospace and defense market is also in a strong growth phase, valued at $463.06 billion in 2026 and expected to reach $610.15 billion by 2031. That marks a compound annual growth rate (CAGR) of 5.67%.
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Howmet Aerospace (HWM) has been one of the clearest winners amid that backdrop, and the company's board just gave investors another reason to pay attention. On July 27, Howmet declared a quarterly common stock dividend of $0.14 per share, payable on Aug. 25, 2026, to holders of record as of Aug. 7, 2026. The dividend hike represents a 16.7% increase from the prior $0.12 quarterly payout.
Is Howmet’s latest dividend hike a sign that the best of its growth story remains ahead? Let’s take a closer look.
Financial Strength Behind the Payout
Howmet Aerospace makes parts for aircraft and engines — mainly fasteners, turbine parts, and structural components for the aerospace and defense industry.
HWM stock has been moving higher this year. Shares of the company are up 55% over the past 52 weeks and up more than 39% so far this year.
www.barchart.com That kind of run has pushed the valuation up. HWM stock currently trades at a forward price-to-earnings (P/E) ratio of 54.9 times, which is well above the sector average.
Even so, Howmet has kept rewarding shareholders. Most recently, the company raised its quarterly dividend to $0.14, payable on Aug. 25 to shareholders of record on Aug. 7. That is a nearly 17% jump from the prior payout of $0.12. The payout still looks safe as well, with a forward payout ratio of just 12.06%, a five-year streak of dividend increases, and room left to keep investing in the business. The yield of 0.17% is below the industrials average, but the bigger appeal here is dividend growth.
The latest results back that up. In the first quarter of 2026, revenue rose 19% year-over-year (YOY) to $2.31 billion, adjusted EPS climbed 42% to $1.22, and operating income jumped 52% to $753 million. Operating margin improved to 32.6% from 25.4%, while adjusted EBITDA grew 32% to $740 million with a 32% margin. That strong showing led the company to raise its full-year guidance to revenue of $9.65 billion and adjusted EPS of $4.94.
Engines of Long-Term Growth
Howmet Aerospace completed its $1.8 billion cash purchase of Consolidated Aerospace Manufacturing (CAM) on April 6. The deal added precision fasteners, fluid fittings, couplings, and heat shields to its Fastening Systems business. It also gave Howmet more products used in demanding aircraft and engine applications.
Earlier this year, on Feb. 6, Howmet bought Brunner Manufacturing for about $120 million in cash. Brunner makes larger fasteners, giving the company a broader lineup and fitting well with the CAM deal.
Howmet also sold its disk-forging plant in Georgia for about $230 million on March 31. The sale resulted in a $93 million pre-tax gain and freed up capital for faster-growing, higher-margin businesses.
Finally, during Q1, Howmet moved a titanium-alloy operation from its Engine Products segment to Engineered Structures. The change was made to better match the operation with the rest of the business. Prior segment figures were updated for comparison, but the move did not change the company’s overall financial results, financial position, or cash flow.
Analysts Remain Constructive on Howmet Aerospace Stock
Howmet Aerospace is set to report its Q2 2026 results before the market opens on Aug. 6. Analysts expect earnings of $1.23 per share for the June quarter, up 35% from $0.91 a year ago. For full-year fiscal 2026, Wall Street foresees EPS of $5.05, marking a 34% YOY increase from $3.77 per share.
In July, Jefferies kept a “Buy” rating on HWM stock and raised its price target to $340. Meanwhile, JPMorgan has an “Overweight” rating and a price target of $310. Wells Fargo is more cautious, offering an “Equal Weight” rating and a $240 target, saying that some of the short-term upside may already be priced in and that supply-chain risks should not be ignored.
Even so, the overall view remains strong. Based on 23 analysts with coverage, HWM stock has a consensus "Strong Buy" rating. The average price target of $311.29 points to potential upside of about 9% from current levels.
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www.barchart.com Conclusion
Howmet Aerospace’s 16.7% dividend increase looks justified by rising earnings, expanding margins, and a payout ratio that leaves substantial room for continued investment and shareholder returns. HWM stock is not cheap, and the premium valuation means any slowdown in aerospace production or fresh supply-chain disruptions could bring volatility. Still, the most likely direction for shares appears higher over the long term if Howmet continues converting aerospace demand, portfolio additions, and operating leverage into earnings growth.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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