Free cash flow rose 63.2% over the year while net income fell 1.9%: the cash behind the dividend is expanding while the profit line contracts.
What Leidos raises its dividend: can the filings support it? announced
The release put the increase at 4.7%. At the latest share price of $142.98, the declared rate works out to a yield of 1.2% a year.
Can it afford it?
Over the twelve months to Q2 2026, Leidos paid $216.0 million in dividends. That amount was 15.7% of net income and 10.0% of free cash flow over the same period, leaving cash over after the payment.
Growth has picked up
Operating cash flow was $2.3 billion, up 54.9% on the year before. Capital spending was $137.0 million, or 0.8% of revenue, leaving free cash flow of $2.2 billion. The free-cash-flow margin of 12.3% is up 4.5 percentage points from a year earlier and sits above every past quarterly reading, which ranged from 4.2% to 11.5%.
Revenue over the twelve months to Q2 2026 was $17.6 billion, up 3.4% on the year before. That rate was 1.1 percentage points higher than a quarter earlier, though it is higher than only 13% of the company's past readings.
The trailing operating margin was 11.5%, higher than 90% of the company's past readings. The trailing net margin was 7.8%, and net income over the twelve months was $1.4 billion.
The operating margin declined 0.4 percentage points over the year. Revenue grew while the profit line contracted, meaning costs absorbed a larger share of each dollar of sales.
The value hinges on margins more than growth
In our model, a 5-percentage-point reduction in growth would lower value by 29.1%, while a 5-percentage-point increase would raise it by 38.2%. A 1-percentage-point drop in the free-cash-flow margin would lower value by 9.4%.
What Leidos raises its dividend: can the filings support it?'s next report has to show
The next filing will show whether cash flow keeps pace with what the company is returning to shareholders.
