The increase starts with a fourth-quarter dividend of 98 cents a share, payable Dec. 3 to holders of record Nov. 12.
The previous quarterly dividend was 93 cents a share. Last year, Honeywell lifted its dividend 3% amid the pandemic.
Honeywell recently posted stronger-than-expected earnings for the second quarter, while boosting its full-year profit outlook. Rising sales for its aerospace division helped as airlines are beginning to recover traffic that was hard hit during the worst of the pandemic-forced shutdowns.
The company's warehouse automation business surged during the pandemic as more and more retailing moved online.
Honeywell shares at last check rose 1.7% to $215.91. The stock touched a 52-week high near $237 in early August.
Dividend increases are generally seen as a sign of strong corporate performance, indicating a company has surplus cash to return to shareholders.
Morningstar analyst Joshua Aguilar puts fair value for Honeywell at $211.
“Honeywell is one of the strongest multi-industry firms in operation today, which we think the market rightly recognizes by awarding the firm a conglomerate premium,” he wrote in a July commentary.
“We predicate our thesis mostly on:
a) the commercial aerospace recovery;
b) continued strength in defense; and
c) an increasingly automated world in mission critical end-markets like warehousing, utilities, oil and gas.
He offered these forecasts: “From a 2019 base year, we think Honeywell is capable of:
· mid-single-digit top-line growth,
· incremental operating margin growth of just over 30%,
· high-single-digit adjusted earnings per share growth, and
· free cash flow conversion safely over 100%, which represents about a 5% increase on average from its legacy conversion rates.”