Three Dividend-paying Defense Stocks to Purchase After Share Prices Plunge 12/27/2024 | | | Jim Fink hasn't closed a losing trade in over 8 years, and in just moments he's going to be releasing 2 new trades... they go live on Tuesday and could be closed out by Friday, with wins so big you can double your money! You won't want to miss these.
Grab your two Tuesday trades here. Click Here... | | | | Three dividend-paying defense stocks to purchase after share prices plunge provide potential paths to profit from prominent opportunities.
A good chance for both income and share price appreciation exists even though U.S. defense stocks have declined as much as 30% since the Nov. 2 presidential election due to investor concerns about the potential policies of the new administration that might include cost-cutting by proposals from the planned Department of Government Efficiency (DOGE). But these concerns are "likely overdone" and such defense stocks may prove to be attractively priced, wrote Jason Gursky, an aerospace and defense analyst with Citi Research.
One reason is that an unspoken social contract exists between the military and its volunteer fighting force to equip them with superior equipment, Gursky continued. Without a military draft, the government needs to maintain America's tradition of providing its warfighters with the best combat equipment possible.
Is America Abdicating Its Global Leadership Role?
At stake is whether curbing U.S defense spending would be damage in its post-WWII role as a world military leader. Gursky questioned in a recent research note whether President-elect Trump will choose to pack up the military's proverbial bags and retreat to bases on the home front, leaving allies to defend themselves without American support and allow the United States to materially cut defense spending.
"This would obviously be bad for U.S. contractors," Gursky said. "But we don't think that's the likely outcome given the potential negative impact on global trade, which remains important to the U.S. economy. In our view, isolationism simply isn't an option that's on the table."
President-elect Trump has called unapologetically for U.S. allies to increase spending, and urged North Atlantic Treaty Organization (NATO) member nations in Europe to do so. The result would be heightened spending levels on weapons, benefiting U.S. contractors since as much as 20% to 30% of the industry's revenue is driven by international markets. This demand should support the industry's continued growth outlook, Gursky continued.
Three Dividend-paying Defense Stocks to Purchase: GE Aerospace
Boston-based GE Aerospace (NYSE: GE) is a key buy recommendation among dividend-paying defense stocks of Citi Research. In April 2024, GE Aerospace announced it had begun operating as an independent public company focused on the future of flight, following the completion of its GE Vernova spin-off.
At the company's Investor Day in March 2024, GE Aerospace reaffirmed its annual guidance and presented a longer-term financial outlook, including plans to achieve approximately $10 billion of operating profit in 2028. Additionally, GE Aerospace shared a capital allocation framework to invest in growth and innovation, while returning roughly 70-75% of available funds to shareholders.
The launch of GE Aerospace completed the company's multi-year financial and operational transformation. For the last several years, GE took steps aimed at strengthening its business, slashing more than $100 billion in debt since 2018.
The company has pursued continuous improved customer service, enabling the creation of three independent companies – GE HealthCare, GE Vernova and GE Aerospace, its management said. The goal was to position each for growth and efficiency.
A big part of the GE Aerospace business is tied to aftermarket growth and services, Gursky mentioned. As OEMs struggle to increase production and deliveries, the aftermarket is poised for heightened growth for longer, he added.
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Reston, Virginia-based General Dynamics Corp. (NYSE: GD), another buy recommendation of Citi Research, is involved with most of the world's technologically advanced business jets, wheeled combat vehicles, command and control systems and nuclear submarines. Those products and services are offered through its four business groups: Aerospace, Marine Systems, Combat Systems and Technologies.
The stock has jumped 44.48% since it started to be recommended by stock picker Jim Woods, the head of the Successful Investing newsletter, on September 28, 2018. GD has risen 4.55% so this year. As a former Army paratrooper, Woods has a keen interest in defense issues and follows them closely for his Successful Investing and Fast Money Alert advisory service subscribers.
Jim Woods heads the Successful Investing newsletter and co-leads Fast Money Alert.
The company notched an overall operating margin of 11.0%, with margins of 15% in Aerospace, 14.4% from Combat Systems, 9.5% with Technologies and 7.6% by Marine Systems. Citi Research rates shares of General Dynamics as a "Buy."
Chart courtesy of www.stockcharts.com
The investment bank recommends building positions in the company due to: - An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years;
- The company notched an overall operating margin of 11.0%, with margins of 15% in Aerospace, 14.4% from Combat Systems, 9.5% with Technologies and 7.6% by Marine Systems. Citigroup rates shares of General Dynamics as a "Buy."
- The investment bank recommends building positions in the company due to:
- An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years.
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On the other side are those who hesitated, confident that "it's just another year-end" without seeing the signs of what's to come.
But as history shows us — time and time again — markets shift dramatically during this period. And every time, the financial world is divided:
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Don't wait to position yourself for success in 2025. Take action now. Click Here... | | | | Three Dividend-paying Defense Stocks to Purchase: Lockheed Martin
Lockheed Martin (NYSE: LMT), of Bethesda, Maryland, is a defense and aerospace company that resulted from a 1995 combination of Lockheed Corporation and Martin Marietta Materials, Inc. In its current form, Lockheed Martin focuses on defense, space, intelligence, homeland security and information technology. Plus, LMT rates as another Citi Research buy.
The company's key business segments are Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Lockheed Martin's management recently laid out the case that margins are likely to trough in 2024 and drift toward 11%-plus over time, driven largely by product mix.
The loss-making classified contract at Lockheed Martin's MFC business will be a tailwind in 2025, i.e., lower forward loss charges, while the rest of the margin accretive MFC portfolio is likely to grow faster than the remainder of the company. Further, new awards across the company better reflect the current cost environment and should produce margins higher than pre-pandemic backlog, according to a Citi Research note.
Chart courtesy of www.stockcharts.com
U.S. Government's 'Social Contract' with Volunteer Soldiers to Provide Top Equipment
"The U.S. military has an implicit contract with its all-volunteer force to field the best weapons systems in the world in return for their service," Gursky said. "This means that these systems must be on the cutting edge of military technology and, most importantly, that they work when they reach the field. This level of commitment comes at a price, but it helps to maintain the country's ability to field an all-volunteer force."
In that light, Gursky opined it is unlikely that DoD will significantly shift its procurement approach to favor untested weapons systems simply because they are less expensive. Doing so could deter volunteers, he added.
A big part of their business is tied to the aftermarket growth and services. As OEMs struggle to increase production and deliveries, Gursky wrote that he expects the aftermarket to experience higher growth for longer.
The Department of Government Efficiency (DOGE) is reportedly aiming to cut the federal workforce to save money, particularly to limit the long-tail pension and other benefit costs of employees. It could lead to a shift toward using contractors to create variable rather than fixed costs.
Three Dividend-paying Defense Stocks to Purchase: Final Word
Despite dividend-paying defense stocks to purchase dropping as much as 30% since the Nov. 2 presidential election, they could give bargain-hunting investors a chance to buy shares at discounted prices in pursuit of income and potent profits. | | | Sincerely,
Paul Dykewicz, Editor
DividendInvestor.com
| | About Paul Dykewicz: Paul Dykewicz is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul also is the author of an inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain", with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz. | | | | | |
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