The stock currently offers a 2.2% yield. Huntington Ingalls has a stock price of $218. The company’s products continue to perform well, but we feel that the expected return isn’t enough to justify a buy recommendation at this time. Accessed Dec. 7, 2020. The company gave shareholders a 10% dividend increase for the payment made 12/28/2018. The Bottom Line. There seems to be a trend here. Accessed Dec. 7, 2020. Lockheed Martin has increased its dividend for 16 consecutive years. The company also received a $270 million award for missile compartment work under joint development with the U.K. Royal Navy. Volumes for the F-35, F/A-18 and F-16 programs were all higher year-over-year. The Textron Aviation and Bell Helicopter divisions contribute ~60% of sales. Defense stocks are best represented by the Invesco Aerospace & Defense ETF (PPA), although the fund targets both the defense and aerospace industries. The stock has a current yield of 1.9% and the annualized dividend of $3.77 would consume just 33% of expected earnings for the year. Source: Second Quarter Results Presentation, slide 2. Demand for the F-35 program was especially strong during the quarter. If the stock were to revert to this average by 2024, the corresponding multiple contraction would be a 1.4% headwind to total annual returns. Public Safety orders improved 30% last quarter. Combat systems had revenue growth of 8.1% due to higher than expected growth in the M-1 Abrams tank production. If shares were to trade at this multiple by 2024, the corresponding impact would reduce annual returns by 4.3% over this period of time. All four divisions within the company reported growth. As mentioned previously, Raytheon and United Technologies have entered a merger agreement. Accessed Dec. 7, 2020. On June 9th, L3 Technologies and Harris Corporation completed their previously announced merger. General Dynamics reported second quarter earnings results on 7/24/2019. The world's most valuable brands are curiously overrepresented among stocks that have raised dividends … General Dynamics was also awarded two large contracts during the quarter. In my monthly series of 10 Dividend Growth Stocks, I rank a selection of dividend growth (DG) stocks in Dividend Radar and present the 10 top-ranked stocks for consideration. Space & Intelligence Systems grew 8%. PPA has dramatically underperformed the broader market. Combined with stronger worldwide demand for defense products, Lockheed Martin could grow earnings-per-share by at least 8% annually over the next five years. Delivers for jets declined to 46 from 48 a year ago while commercial turboprops deliveries decreased to 34 from 47. The Electronic Systems segment had 14% growth, as all three businesses saw increase in demand. Meanwhile, Intelligence, Information & Services saw a 5% increase in sales, mostly due to higher volumes of classified programs in the areas of cyber and space. While … On the strength of second quarter results, Raytheon now expects earnings-per-share to range from $11.50 to $11.70 for 2019, up from earlier guidance of $11.40 to $11.60. Lockheed Martin StockLockheed Martin (LMT) is the biggest defense contractor and briefly … The company earned $2.92 per share, which beat estimates by $0.26 and increased 19% from the previous year. Huntington Ingalls’ annualized dividend is $3.44. Lockheed Martin earned $5.00 per share, which topped estimates by $0.26 and represented 23.4% growth from the previous year. We feel that growth is likely to moderate going forward. Textron Aviation was down 12% due to lower jet and commercial turboprops deliveries. Following the merger, Raytheon Technologies Corporation will be the third largest commercial company and the second largest provider of defense products in the world. The annualized dividend of $2.94 represents a payout ratio of 37% of expected earnings for 2018. We do not believe that the company will grow its dividend in the coming years. Given these investors defensive stance, one might ask how about some real defense stocks, as in the Aerospace and Defense … Missiles and Fire Control operations create missile defense systems, while the Space Systems segment produces satellites. Using expected earnings-per-share for the year, the payout ratio is just 2.1%. General Dynamics also saw increased demand for munitions and armaments. Textron raised both the low- and high-end ranges of its EPS guidance by $0.10. The company compounded earnings at a rate of 6.1% over the last decade. The company generated $66.5 billion in sales last year. Newport News Shipbuilding had revenue growth of 7.1%, but suffered a 23% decrease in operating income. We feel that a P/E ratio of 17 is a more appropriate target. Using expected earnings-per-share of $19.43, the stock has a P/E ratio of 18.7. General Dynamics has a current market cap of $55 billion and produced more than $36 billion in sales last year. Investing in companies in this sector has been a big win for shareholders. The company now expects earnings-per-share of $7.90 to $8.05 for 2019, up from $7.80 to $8.00 previously. A kamikaze defense is a defensive strategy sometimes resorted to by a company's management to prevent a takeover by another company. The two companies are projected to generate $74 billion in sales in 2019 and will capture more than $1 billion in gross annual run-rate cost synergies by year four after closing. This latest increase is slightly below the 10-year average increase of 11%. If shares were to revert to this level by 2024, then valuation would be a 2.7% headwind to annual returns over this period of time. In 2015, the company purchased Sikorsky Aircraft, which produces Black Hawk helicopters, from United Technologies for $9 billion. On top of that, they have at least a 10-year streak of paying dividends without interruption, whether that be on a monthly, quarterly, semiannual or annual basis. The offers that appear in this table are from partnerships from which Investopedia receives compensation. We rate shares of Northrop Grumman as a hold, but would be more interested in the stock if it were to pullback. Textron, Inc. Following a 5% dividend increase for the payment made 12/10/2018, United Technologies has now increased its dividend for the past 25 years, the second longest dividend growth streak on this list. This division had a book-to-bill ratio of 1.2x and a 6% increase in backlog. Raytheon reported second quarter results on 7/25/2019. The combined company will have net debt of $26 billion, with the legacy United Technologies business contributing approximately $24 billion. The total estimated contract value rose 7.2% to $26.8 billion for this division. United Technologies has seen earnings-per-share grow at a rate of 6.3% from 2009 through 2018. The annualized dividend of $5.28 represents a payout ratio of just 27% of the midpoint for expected earnings-per-share for 2019. Textron reported second quarter earnings results on 7/17/2019. Returns for Huntington Ingalls over the next five years would consist of the following: We forecast that Huntington Ingalls can offer a total annual return of 5.2% over the next five years. United Technologies reported second quarter earnings results on 7/23/2019. This defensive stock offers a quarterly dividend of $0.13 per share, which represents a modest 1.4% yield. The company increased its dividend 9.5% for the September 2019 payment. The company’s G600 jet received certification from the FAA on 6/28/2019. Increases have been very aggressive; the dividend has compounded at an annual rate of almost 25% over the past five years. These are the defense stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Using the midpoint for earnings guidance of $3.75, the stock has a P/E ratio of 13.6. Investopedia requires writers to use primary sources to support their work. Shares yield 1.5% at the moment, but Northrop Grumman has a very low payout ratio. Consistent with this, General Dynamics raised its dividend 9.7% for the May 2019 payment. Aeronautics sales improved 4% due to higher production of the F-35 program along with increases in development and continuing contracts. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy. Shares of QUALCOMM, ResMed, Starbucks, Texas Instruments, and UnitedHealth represent a potential buying opportunity for the long-term … We feel 14x earnings is more appropriate as this is closer to the stock’s 10-year average valuation. Another area of strength was the Space division, which grew sales by 11% on higher revenue from government satellite and strategic and missile defense programs. Based on of expected earnings-per-share for 2019, the payout ratio is less than 24%. Axon Enterprise Inc. "Axon Reports Q3 2020 Revenue Growth of 27%, ARR Tops $200 million, Up 44%." ... That’ll offset the drag from the classic defensive dividend stocks. We feel that the company is capable of annual growth of 6% through 2024. The first was a $495 million contract for a Columbia-class development and industrial base from the U.S. government. This segment saw higher revenues due to increased volumes for aircraft carriers and naval nuclear support services which were offset by lower submarine revenues. Textron develops and manufactures military and civilian aircraft, military munitions, recreational vehicles and engines. Mission Systems grew 11.3% due to strength in space, intelligence and cyber systems. This article will look at the top 8 stocks in the aerospace and defense sector according to the Sure Analysis Research Database. Other U.S. government agencies and international clients make up about 20% each of remaining sales. Missiles and Fire Control grew 16%, resulting from higher sales for classified programs as well as tactical and strike missiles. Northrop Grumman has increased its dividend for the past 16 years. We maintain our hold recommendation on shares of L3Harris. Backed by low debt, tons of free cash flow (FCF) and a payout ratio of just 45%, Lockheed's 3.1% dividend yield is one of the safer and more attractive industrial stock dividends … Lastly, accounting for divestitures, Industrial sales were lower by 8.4% to decreased volumes. The annualized dividend of $4.08 is slated to consume just 34% of expected earnings-per-share for the year. The company earned $2.77 per share, $0.06 higher than expected and a 5.7% increase from the previous year. Textron has a market cap of $11.8 billion, with annual revenues of $14 billion. The company increased earnings at a rate of 7.6% over the last 10 years. "Financial Data." Northrop Grumman Corp. "Northrop Grumman to Sell Federal IT and Mission Support Business to Veritas Capital for $3.4 Billion." Expected total annual returns would consist of the following: In total, United Technologies is forecasted to return just 2.7% per year through 2024. This has caused many stocks in this sector to reach valuations well above their historical average.

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