Christopher Johnson: One of the UK’s best performing stocks is aerodefense company Rolls Royce.
Its share price soared by 15% on Thursday to 7 pounds and 39 pence, a new record high, after announcing it would restore its dividend payments for the first time since the coronavirus pandemic, after better-than-expected full year results.
Rolls Royce said it will pay a dividend of 6 pence per share which amounts to around 500 million pounds in June 2025.
The company will also undertake a £1 billion share buyback scheme. In total the company will return £1.5 billion to shareholders.
The blue-chip stock, which manufactures fighter jet engines and nuclear reactors for submarines, saw its underlying operating profits jump by 55% in 2024 to £2.5 billion.
Its underlying sales reached £17.8 billion up 15% on levels in 2023.
Meanwhile, Rolls Royce doubled its cash reserves to £2.4 billion.
The UK government’s decision to increase defence spending to 2.5% of GDP may also act as a tailwind for Rolls-Royce, as the UK ups investment in its joint fighter jet programme with Japan and Italy, the AUKUS nuclear partnership with both Australia and the US, and the UK’s nuclear-powered submarine fleet.
Over one year Rolls-Royce is up 102 per cent and its shares are currently trading at £7.50.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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