BAE Systems (LSE:BA) has raised its Dividend for 22 straight years, and its latest interim of 15p is due to be paid on 2 December. A record order Backlog and a sharply higher cash forecast have strengthened the backdrop, even if the Yield remains modest. The dividend data here comes from a snapshot dated 7 October 2026, and the most recent results were published on 30 July.

The dividend in numbers

The snapshot shows an annual dividend of 36.3p per share and a latest interim payment of 15p. The trailing 12-month yield is 1.9%, and the indicated yield is 2.0%. Year-on-year dividend growth stands at 10.0%, and the interim itself was raised by 11%.

The streaks are the outstanding feature here. BAE has paid dividends for 42 consecutive years and increased them for 22. Relatively few companies in the data can match that combination, and it suggests the commitment has lasted through several very different spending and political cycles.

A yield of around 2% is well below what many income-focused investors would seek, however. The appeal is much more about dependable growth than immediate income. The fact that the indicated yield is slightly above the trailing yield is consistent with a dividend that is moving up.

Comfortable cover

The trailing Payout Ratio of 52.9% implies Earnings cover of about 1.9 times. This is a balanced figure, leaving a good share of profit in the Business while still sharing a meaningful amount with holders.

The first-half numbers give some further reassurance. Underlying Earnings Per Share of 38.9p were more than two and a half times the 15p interim. That comparison flatters a little, since the interim is typically the smaller of the two payments, as the 36.3p annual total indicates, but it does show earnings growing at least as fast as the payout. Underlying earnings per share rose 13%, ahead of the 11% interim increase.

A solid first half and higher guidance

For the six months to 30 June, sales reached £15,772m, up 9% at constant currency, and underlying earnings before interest and tax rose 11% to £1,701m. Free Cash Flow was a £1,791m inflow against a £368m outflow a year earlier, although customer advances accounted for much of that swing. Such advances can reverse over time, so the first-half figure should not be seen as a regular run-rate.

The group backlog reached a record £84.0bn, which offers considerable visibility over future work, although the narrower IFRS order book slipped to £62.7bn from £63.1bn at the end of 2025.

Management raised its full-year outlook across the board. It now expects sales growth of 8% to 10%, underlying earnings growth of 10% to 12% and earnings per share growth of 11% to 13%. The free cash flow forecast rose to more than £2.0bn, from more than £1.3bn. Despite that, the American depositary receipts were reported to have fallen 8.3% in after-hours trading, which suggests that expectations were already high.

What to watch

The immediate date for income holders is the 2 December payment of the 15p interim. Any update before the year end would be the next test of whether the raised forecasts still hold.

Investors should watch cash conversion, particularly whether customer advances unwind, and how much the backlog continues to grow. Order intake depends on government budgets, so changes to defence spending plans can influence sentiment quickly. At the full-year results, the final dividend will show whether the streak reaches 23 years and whether growth holds near 10%. With a low starting yield, the rate of increase is what ultimately matters to income investors in this stock.