Dividend Investor Insights: Five Dividend-paying Defense Investments to Purchase

You are receiving this email because you signed up to receive our free e-letters, or you purchased a product or service from its publisher, Eagle Financial Publications. Five Dividend-paying Defense Investments to Purchase 06/07/2024 [Sponsored Content [This "$1,617 Dividend" Expires on June 27](]( This stock is paying TRIPLE what the average dividend aristocrat pays... And it's trading at an affordable price. That means you can load up on shares right now... And you'll be guaranteed a dividend check - but only if you act by June 27th! There are no redo's. No turning back the clock. You either put your name on the shareholder's list by June 27th... [or you'll miss out on this INSTANT income.]( [Click Here...]([1pxtrans]( Five [dividend]( [defense investments]( to purchase feature two exchange-traded funds (ETFs) and three industry giants that offer cover to soldiers on the battlefield and to investors in the stock market. The five dividend-paying [defense stocks]( to purchase have been among the corporate beneficiaries of battles taking place in Ukraine due to Russia's invasion of the sovereign borders of its neighbor to the West, as well as fighting in the Palestinian territory of Gaza in the Middle East after Hamas militants carried out a murderous Oct. 7 invasion of Israel. Demand in the United States for defense equipment and machinery is on the rise due to its national security doctrine that aims to use military modernization to deter adversaries. Meanwhile, European countries are boosting their NATO budgets to stay in good standing with the alliance, according to a recent research report by Citigroup. Many defense companies serve both military and commercial customers, but the biggest demand growth lately is for equipment and ammunition amid Russia’s attacks on Ukraine and the Middle East conflict between Israel and Hamas militants. Five Dividend-paying Defense Investments to Purchase: Carlson's Call Bob Carlson, a former pension fund chairman who heads the [Retirement Watch]( investment newsletter, suggested that investors consider exchange-traded funds (ETFs) focused on defense and aerospace. Many of the investments Carlson recommends in his monthly [Retirement Watch]( newsletter feature ETFs. Bob Carlson, who heads [Retirement Watch]( answers questions from Paul Dykewicz. Five Dividend-paying Defense Investments to Purchase: GCAD The first of five dividend-paying defense investments to purchase is Gabelli Commercial Aerospace & Defense (GCAD). The ETF has only has been open since early 2023, so its track record is still developing. Like other Gabelli funds, GCAD is actively managed and does not try to track an index, [Retirement Watch]( leader Carlson told me. GCAD invests in income-producing securities in defense, aerospace and aviation. Courtesy of [www.StockRover.com](. Learn about Stock Rover by [clicking here](. Recently, about 95% of the fund was in the industrials sector and the other 5% was in technology. It recently owned 26 stocks and had 63% of the fund in the 10 largest positions. The five biggest holdings at last check were Moog (NYSE: MOG:A), Boeing (NYSE: BA), Spirit Aerosystems Holdings (NYSE: SPR), Ducommun (NYSE: DCO) and Curtiss-Wright (NYSE: CW). The fund's dividend yield is 0.9%. Chart courtesy of [www.stockcharts.com]( Five Dividend-paying Defense Investments to Purchase: XAR Carlson also praised the dividend-paying SPDR S&P Aerospace and Defense (XAR), an ETF designed to track the S&P Aerospace & Defense Select Industry Index. XAR recently had 32 holdings with 43% of the fund in the 10 largest positions. The five largest XAR holdings, all greater than 4% of the fund, recently have been Woodward Inc. (NASDAQ: WWD), Howmet Aerospace Inc. (NYSE: HWM), RTX Corp. (NYSE: RTX), Curtiss-Wright (NYSE: CW) and HEICO Corp. (NYSE: HEI). The dividend-paying fund has been on a sharp ascent lately, as the chart below shows. Its 10-year average annual return is 4.45%. Chart courtesy of [www.stockcharts.com]( [[Retirement in a Box: From Zero to $2,500 a Month]( There is a way retirees can collect thousands of dollars per month for the rest of their lives -- tax-free. Plus, this tax-free income source is 100% legal and approved by the IRS. And here’s the kicker: even if they don’t have enough money put away yet for retirement... even if they’re over age 60... they can still get thousands of dollars a month from this opportunity. [Click here to find out more.]( [Click Here...]( Five Dividend-paying Defense Investments to Purchase: General Dynamics (GD) General Dynamics (NYSE: GD), headquartered in Falls Church, Virginia, provides land combat vehicles, weapons systems and munitions, ship construction and repair, and technology products and services. In addition, General Dynamics is a leader in the business aviation industry through its Gulfstream and Jet Aviation subsidiaries. Overall, General Dynamics operates in four main segments: Combat Systems, Aerospace, Marine Systems and Technologies. 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: 1) An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years; 2) Marine segment growth prospects and improved margins as the company’s labor force and supply chain normalize post-pandemic; 3) Rising demand for the Combat Systems segment as the United States and its NATO allies prepare plans for increased military spending to deter further land-based conflicts in Europe; and 4) Increasing valuation for defense prime contractors. Chart courtesy of [www.stockcharts.com]( Five Dividend-paying Defense Investments to Purchase: Gursky's Analysis Citigroup recently boosted its 12-month price target for GD to $320, up from $300, based on a 19x price/earnings (P/E) multiple on its estimates a year from now. However, there are risks that include the business jet industry’s vulnerability to unpredictable shocks that cannot be incorporated into earnings models, such as terrorism and epidemics (COVID/SARS). “Furthermore, the industry has historically been correlated to economic growth,” wrote Citigroup defense and aerospace analyst Jason Gursky. “The company’s other exposure is the defense market, which is subject to changes in political will, global threats to the U.S. and its allies, the state of the federal budget and the condition of existing U.S. and allied military equipment. General Dynamics shares may materially underperform our price target should the economy enter a prolonged recession that results in decreased business jet orders and flight hours. Shares would also likely underperform to the extent that global peace broke out and DoD budgets were severely cut.” Louie DiPalma, a defense and aerospace analyst at the Chicago-based investment firm William Blair, also likes General Dynamics as an investment. He currently has an “outperform" rating on the stock. A third fan of the stock is Jim Woods, a former Army paratrooper who recommends it in his Income Multipliers portfolio to his [Successful Investing]( newsletter subscribers. As a former military man, Woods has a keen interest in defense issues and follows them closely for his [Successful Investing]( subscribers. Jim Woods leads [Successful Investing]( and co-heads [Fast Money Alert](. Five Dividend-paying Defense Investments to Purchase: L3Harris (LHX) L3Harris (NYSE: LHX), a Melbourne, Florida-based technology company, defense contractor and information technology services provider, produces command and control systems and products, wireless equipment and other equipment. The company is a “buy” recommendation of Citigroup and has been given a 12-month price target of $245, a P/E multiple that is a 10% discount to the S&P 500. “The primary company-specific risks include execution on current programs at the margin rates we forecast and the company’s ability to maintain market share on new business,” wrote Citigroup’s Gursky. “We currently expect the company to execute well on its backlog but recognize the global aerospace supply chain has been constrained by the pandemic. Furthermore, we assume the company will continue to win new business and protect its core business." More macro risks, Citigroup cited, include: 1) Pandemic-induced supply chain delays that last longer than mid-decade and that hamper the ability of the industrial base to successfully execute on its backlog; 2) A sudden or gradual shift over time toward more dovish security and defense postures by the U.S. and its allies that spur less military spending than expected; and 3) Fiscal austerity measures by the U.S. and its allies, driven partly by economic and political reasons. Other risks feature downward pressure on government spending growth, including for the military, compared to forecast. Conversely, if any of these factors are better than expected, the stock could outperform the price target, Gursky added. Chart courtesy of [www.stockcharts.com]( [[Level up your trading intuition](]( To buy, sell, or stand aside? That is the question. And it’s simple to answer when you [sharpen your market intuition](. At a single glance of a (powerful) chart, I want to show you how to always make the right decision. [Trade this way >]( [Click Here...]( Five Dividend-paying Defense Investments to Purchase: Lockheed Martin (NYSE: LMT) Lockheed Martin (NYSE: LMT), a Bethesda, Maryland-based defense and aerospace company, earned a 12-month price target of $525 and a buy recommendation from Citigroup. The company formed in 1995 from a combination between Lockheed Corporation and Martin Marietta Materials, Inc. In its enlarged form, Lockheed Martin focuses on defense, space, intelligence, homeland security and information technology. The company operates the following business segments—Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Management recently gave guidance that margins are likely to trough in 2024 and head toward 11%-plus over time, driven largely by product mix, Citigroup wrote in a recent research note. 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 the research note. Chart courtesy of [www.stockcharts.com]( Geopolitical Risk Rises in Rafah President Biden said he supports a new ceasefire proposal in Gaza that would include the release of the hostages taken from Israel by Hamas militants in its brutal raid on Oct. 7. The three-part proposal calls for a six-week ceasefire with the Israel Defense Forces (IDF) pulling back from populated areas of Gaza. There further would be increased humanitarian aid, as well as an exchange of some hostages for Palestinian prisoners. The end goal would be a permanent "cessation of hostilities" and a major reconstruction plan for Gaza. However, the United States incurred a severe setback when a $300 million pier quickly erected by the U.S. military to disperse desperately needed food, liquids, medicine and other aid to civilians in Gaza broke apart amid rough seas. The ceasefire proposal follows the chief prosecutor of the world’s top war crimes court saying on Monday, May 20, that he is seeking arrest warrants for top leaders of Israel and Hamas for “crimes” committed during their eight-month war. Israel's Prime Minister Benjamin Netanyahu, his Defense Minister Yoav Gallant and Hamas leaders Yehia Sinwar, Mohammed Deif and Ismail Haniyeh each was accused of war crimes, along with crimes against humanity, in Gaza and Israel, respectively. Netanyahu called the prosecutor’s accusations against him a “disgrace,” and an attack on the Israeli military and all of Israel. He vowed to press ahead with Israel’s war against Hamas and keep seeking the freedom of the hostages taken during the Oct. 7 attack against Israel. Israel is trying to find and destroy an extensive tunnel system in neighboring Gaza that has been used to store weapons, as well as hide the Hamas leaders and militants who were responsible for the Oct. 7 raid in Israel that [killed an estimated 1,200 people]( and took 240 hostages into Gaza. The battle now is ongoing in Rafah, where Hamas militants have positioned themselves in the midst of a large civilian population that heightens the fallout to human life. The Gaza Ministry of Health estimates that more than [35,000 Hamas fighters and Palestinian civilians]( have lost their lives since the war began Oct. 7. Russia's Push Forward in Ukraine Causes Western Resistance Russian forces keep trying to penetrate the border area near Kharkiv, Ukraine’s second largest city. However, Western allies of Ukraine are relaxing restrictions on using weapons they supply to Ukraine. With Ukrainian forces outnumbered and outgunned, Russia's stepped up attacks caused Western leaders to acknowledge that Ukraine must be allowed to fire at military targets in the invaders' territory to help protect theie civilians. Russia’s leaders have adopted a “meat grinder” war strategy of sending overwhelming waves of soldiers forward to wear down Ukrainian forces and expose their locations to kill as many of the defenders as possible. An overall death toll of more than 50,000, [estimated by the BBC](, is eight times higher than the only official public acknowledgement of fatality numbers released by Russia in September 2022. The five dividend-paying investments to purchase are benefitting from strong demand amid ongoing military clashes. Investors seek income and share appreciation traditionally can turn to defense stocks when demand for weapons is strong. 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. 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