BAE Systems dividend: cash cover and yield
BAE Systems' dividend is forecast to rise from £0.399 to £0.483 per share, with the base case extending the recent 10% annual growth pattern. Across 2021–2025, BAE Systems generated £8,826m of free cash flow and paid £7,174m through dividends and buybacks; in 2025, only £15m remained after those distributions.
How much does BAE Systems pay per share?
Dividends rise in the base case from £0.399 to £0.439 and then £0.483 per share. That extends the recent 10% annual growth pattern and fits the policy of sustainable cover around two times underlying earnings. The bear path moves from £0.37 to £0.35 and then holds, as cash conversion weakens. The bull reaches £0.42, £0.49 and £0.57 as earnings and cash generation accelerate.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| Earnings | 2,534 (2,247 / 2,738) | 2,726 (2,271 / 3,068) | 2,926 (2,342 / 3,393) |
| Dividends per share | 0.40 (0.37 / 0.42) | 0.44 (0.35 / 0.49) | 0.48 (0.35 / 0.57) |
| Price to earnings | 22.00 (17.00 / 27.00) | 20.00 (15.00 / 28.00) | 18.00 (14.00 / 29.00) |
Does BAE Systems' cash cover its dividend?
Across 2021–2025, BAE generated £8,826m of free cash flow and paid £7,174m through dividends and buybacks. In 2025, only £15m remained after those distributions. Free cash flow therefore did not mean cash available for any acquisition: shareholders had already received most of it.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Free cash flow | 1,630 | 2,029 | 2,155 | 1,641 | 1,371 |
| − Dividends paid | 1,027 | 937 | 857 | 802 | 777 |
| − Share buybacks | 502 | 555 | 561 | 788 | 368 |
| = Free cash flow not paid out | 15 | 448 | 649 | 24 | |
| Paid out, % of free cash flow | 93.8% | 73.5% | 65.8% | 96.9% | 83.5% |
What could change BAE Systems' dividend?
The bear case would gain weight during 2027–2028 if customer advances unwind while completed work fails to produce ordinary receipts, weakening free cash flow and raising net debt. It would strengthen through 2027–2029 if fixed-price cost revisions push Maritime and group margins lower.
What is BAE Systems' dividend yield today?
The 1.9% dividend yield is therefore a supporting measure, not the main investment case. Earnings must survive programme execution, and cash must survive the spending that follows advances.
| Today (Oct 12, 2026) | |
|---|---|
| Share price | 1882.50 |
| Free cash flow yield (calculated) | 2.9% |
| Real free cash flow yield (calculated) | 2.6% |
| Dividend yield (calculated) | 1.9% |