With the Russia-Ukraine war showing no signs of slowing, you may want to consider dividend-paying defense stocks.
All on expectations global defense spending will only rise in response.
For one, “Given Russia’s significant military operations in Ukraine, it is now ‘worthwhile to reconsider’ the effects of the war on global defense budgets, says Morningstar analyst Burkett Huey, as quoted by Forbes.
Two, according to Todd Harrison, director for budget analysis at the Center for Strategic and International Studies, as quoted by Defense One, “The political reality is that the Russian incursion in Ukraine has created much more support for an increase in the defense budget, At a minimum, I think [Democrats] won’t oppose it because it’s hard to, politically, at this point given what we’re seeing.”
Three, Reuters is also reporting the Biden Administration is expected to request another $800 billion for overall defense spending, including $773 billion for the Defense Department.
That being said, investors may want to consider these five opportunities.
Raytheon Technologies Corp. (RTX)
One of the top defense stocks to own is Raytheon Technologies.
After all, the company provides defense systems needed to strengthen global security, such as systems for missile warning and surveillance, fighter jet platforms, hypersonic technology, and air dominance and cybersecurity technologies.
In addition, the company just raised its dividend to 51 cents, payable on Mar. 24, 2022, to shareowners of record at the close of business on Feb. 25, 2022.
Analysts appear to like the stock, too.
Morgan Stanley analyst Kristine Liwag raised the firm’s price target to $118.00 from $110 “on the back of a strong bottom line beat but an outlook that was largely below consensus for 2022. Management guided EPS to a range of $4.60-$4.80 compared with Consensus of $4.95,” according to Barron’s.
Lockheed Martin (LMT)
Lockheed Martin is one of the top bets in the defense sector with a reliable 2.44% dividend yield, and plenty of solid defense contracts with the U.S. government. Most recently, the company announced it received a $166.6 million contract modification from the U.S. Navy to provide, install, and configure 22 F-35 aircraft training devices.
In addition, as noted by TheFly.com:
“Wolfe Research analyst Michael Maugeri upgraded Lockheed Martin to Outperform from Peer Perform with a $467 price target as he is upgrading the Defense sector to Market Overweight following Russia’s invasion of Ukraine last week. With the global perceived threat environment having ‘significantly worsened,’ he expects stronger international military spending and a better U.S. DoD budget environment that creates more supportive valuation for stocks in the sector.”
L3Harris Technologies (LHX)
Not only did the company just raise its dividend 10% to $1.12, it received a $3.69 billion contract from the U.S. Navy for the procurement of Portable Radios and Ancillary Parts Program. Plus, with the Russia-Ukraine situation getting worse, LHX should benefit from a renewed focus on intelligence.
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