No matter what period in history you look at, there is almost always some sort of global conflict. While nobody wants to see protracted and deadly wars, most major countries have adopted a peace through strength posture. For investors looking for sectors to shift to as the AI rally runs its course, it always makes sense to have positions in the defense and aerospace arena.
While many hope for one, there seems to be no end in sight to the Russia-Ukraine struggle. Add in ongoing tensions with China, especially concerning Taiwan, and global hot spots continue to pop up in places like the Middle East. Unfortunately, demand for products from the top defense companies remains strong.
We decided to screen our 24/7 Wall Street defense and aerospace research universe looking for the highest dividend-paying stocks that are Buy rated on Wall Street. Five top companies hit all the metrics we were looking for. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
General Dynamics
Like other major defense contractors, General Dynamics Corp. (NYSE: GD) has had a solid year. This global aerospace and defense company operates through the following four segments.
The Aerospace segment produces and sells business jets, and it offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing and fixed-base operator services.
The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants and auxiliary ships for the United States Navy and Jones Act ships for commercial customers. It also builds crude oil and product tankers and container and cargo ships; provides maintenance, modernization and lifecycle support services for navy ships; and offers and program management, planning, engineering and design support services for submarine construction programs.
The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles and armaments. It offers modernization programs, engineering, support and sustainment services.
The Technologies segment provides information technology (IT) solutions and mission support services; mobile communication, computers and command-and-control mission systems; intelligence, surveillance and reconnaissance solutions to military, intelligence and federal civilian customers; cloud computing, artificial intelligence, machine learning and big data analytics; development, security and operations; and unmanned undersea vehicle manufacturing and assembly services.
Shareholders receive a 2.57% dividend. Royal Bank of Canada has a $270 target price on General Dynamics stock. The consensus target is $261.22, and shares closed on Tuesday at $210.81.
Lockheed Martin
This remains a top aerospace and defense stock to buy, as many on Wall Street expect a continuation of U.S. and foreign defense spending, Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
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