What RTX actually does

RTX, formerly Raytheon Technologies, makes aircraft engines and systems and defense products. It has three businesses: Collins Aerospace (aircraft parts and avionics), Pratt & Whitney (engines, including for the F-35 and many airliners) and Raytheon (missiles, radars and air defense).

How the business makes money

It sells new engines and equipment, but the biggest profits come from aftermarket parts and service for aircraft already flying, which last for decades. Defense work provides a long backlog of government contracts.

The dividend story

After the 2020 merger of United Technologies and Raytheon and the pandemic’s hit to air travel, the dividend was reset to a lower level. It has been raised again since, and is paid quarterly. This history shows that aerospace dividends are cyclical too.

What to keep an eye on

  • Engine issues. Powder-metal defects in some Pratt & Whitney engines required many inspections and costs.
  • Air travel. Demand for flights drives parts and service.
  • Defense budgets. Government spending and politics.
  • Supply chain. Parts shortages delay deliveries.

Quick take

RTX has a strong position in both civil and defense aerospace, with a recovering dividend and an expensive engine issue to resolve.