The aerospace industry has been extremely successful over the past decade, and manufacturing giant Boeing (NYSE:BA) has been one of the biggest beneficiaries. Strong demand from airlines seeking to modernize their fleets has driven massive order flows, and Boeing's backlog is so large that it'll take years for the company to deliver all the planes that its customers have ordered.

Yet as nearly everyone knows, Boeing has faced challenges recently. With its new 737 MAX aircraft grounded for almost a year now after two major accidents, Boeing has had to look at production cuts and other measures. The plane crashes also promise to have large financial impacts. One recent sign of the stress on Boeing came with what's ordinarily the routine matter of announcing its quarterly dividend. Many income investors weren't happy with the latest news from the aircraft manufacturer, and it's calling into question whether Boeing will be able to extend an eight-year streak of higher dividend payments in 2020.

Dividend stats on Boeing

Metric

Stat

Current quarterly dividend per share

$2.055 

Current yield

2.5%

Number of consecutive years with dividend increases

8 years

Payout ratio

120%

Last increase

February 2019

Source: Yahoo! Finance. "Last increase" refers to ex-dividend date.

A big commitment to dividends

Throughout much of its history, Boeing has been a solid blue chip dividend stock. It's been consistent about paying dividends every year, but it hasn't worried about making increases on a frequent basis. Over time, Boeing's dividend has grown significantly, but until recently, that growth generally came in fits and starts.

Starting in the early 2010s, however, Boeing made a new commitment to dividend growth. Annual increases of 50% in early 2014, 25% in 2015, 20% in 2016, and 30% in 2017 meant a big increase in dividends paid to shareholders, and further 20% increases in 2018 and 2019 set expectations going forward.

BA Dividend Chart

BA Dividend data by YCharts.

Yet in December 2019, Boeing did something that it hadn't done since late 2010: It declared a first-quarter dividend that was unchanged from what it had been the previous quarter. That in itself didn't end Boeing's streak of annual dividend hikes, as it has until the end of 2020 to make a payout increase and extend the streak. However, it did ring some warning bells for those paying attention.

A red Boeing aircraft on an airport tarmac, with several blue 777 models in the background.

Image source: Boeing.

What's next for Boeing's dividend?

Boeing's caution makes sense in the context of its current situation. The aerospace giant pushed hard for the U.S. Federal Aviation Administration to recertify the 737 MAX by the end of 2019, but the regulator pushed back and made it clear that the plane would remain grounded into 2020. It's still uncertain when the FAA and other global regulatory agencies will be comfortable having the MAX back in the air.

After having continued to produce new MAX planes even during the grounding, Boeing finally admitted recently that it might have to curtail future production. That has huge financial implications for the aircraft manufacturer. Add to that damage awards that it'll have to pay accident victims, compensation to airlines that haven't been able to fly their Boeing MAX aircraft, and the ongoing costs of trying to make fixes to the aircraft's design in order to get it back in the air, and you can see how many demands Boeing has on its available cash.

At this point, Boeing is probably waiting to see what will happen next with the MAX. If the plane returns to service early in 2020, then the negative impact on cash flow should be temporary enough to avoid any disruption to the company's dividend. However, if the grounding continues well into the year, then the consequences could get more dire -- and that could prompt a more aggressive shift in Boeing's dividend policy going forward.