Three Dividend-Paying Gun Stocks to Buy Following the Defunding of Police and Riots
By: Paul Dykewicz,
Three dividend-paying gun stocks to buy, amid local governments defunding police and failing to control riots, offer potential to climb amid a record 3,931,607 firearms background checks in June, based on data from the National Instant Criminal Background Check System (NICS) of the Federal Bureau of Investigation (FBI).
The three dividend-paying gun stocks to buy show promise, with the FBI’s background check numbers serving as a proxy for gun sales and indicating interest in owning firearms is reaching unprecedented heights since the agency began keeping such records in November 1998. Demand for guns and ammunition often jumps when public officials call for restricting sales, but this historic surge among prospective purchasers could serve as a strong signal for people seeking to invest in such stocks.
The Minneapolis City Council voted on Sunday, June 7, to abolish and rebuild its police department after concluding it could not be reformed after the death of George Floyd, an African American man who succumbed as a police officer kneeled on his neck for more than eight minutes. The officer ignored pleas from the victim that he could not breathe. On the scene were three other officers, including two rookies, who did not stop the senior policeman, Derek Chauvin, from continuing to constrict Floyd’s breathing. Not only were all four officers fired, but Minnesota’s Attorney General Keith Ellison charged Chauvin with murder in the second degree for Floyd’s death, and the other three former officers with aiding and abetting second-degree murder. If convicted, each of the former officers could face up to 40 years in prison.
Three Dividend-Paying Gun Stocks to Buy Rise Following Historic Civil Unrest in Minnesota
Minneapolis Mayor Jacob Frey opposed the City Council’s vote to abolish the police department. The City Council’s wisdom further can be questioned in light of Minnesota Gov. Tim Walz’s May 30 call for the full mobilization of the Minnesota National Guard for the full first time in its 164-year history to quell violent civil disturbances in the Twin Cities of Minneapolis and St. Paul. Mayor Frey blamed the rioting largely on many non-Minnesotans who engaged in direct confrontations with law enforcement.
Gov. Walz said he spoke “extensively” with both Defense Secretary Mark Esper and Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff, to explain the situation and discuss “courses of action going forward.” The governor requested additional DoD help such as “signals intelligence” to assess how the protesters are organizing and mobilizing, while he estimated that 80 percent of those involved in the unrest came from out of state to cause mayhem in Minnesota.
“Whether it be New York, or Denver, or Louisville, or Las Vegas, there is no mayor in America that has the resources to push back on an organized attempt to destabilize civil society with no regard to life or property,” Gov. Walz said during a May 30 press conference.
Civil Unrest in Large U.S. Cities Required the Help of 43,300 National Guard Members
Floyd’s death not only led to protests in Minneapolis but in the victim’s hometown of Houston, as well as New York, Washington, D.C., and other major cities domestically and internationally. Although some protests stayed mostly peaceful, others turned violent and involved attacks on police and law-abiding citizens, destruction of potentially hundreds of millions of dollars in property, looting, shooting and murders. Many protesters also willingly jeopardized their health amid the COVID-19 pandemic by not social distancing and wearing protective masks, as urged by public health experts to stem spread of the virus.
A total of 96,521 National Guard men and women serve in homeland missions in all 50 states, three territories and the District of Columbia, as well as in overseas deployments. During the weekend of June 6-7, more than 43,300 national guardsmen answered the call to support law enforcement in addressing civil disturbances in the District of Columbia and 34 states.
In Washington, D.C., where Mayor Muriel Bowser requested National Guard assistance, the expense had reached $21.1 million, as of June 12, without including any Air National Guard aircraft that were used to transport service members from 11 supporting states to and from the nation’s capital on training status, said Wayne Hall, a National Guard Bureau spokesman. The cost includes pay and allowances of $18.2 million, with an additional $2.9 million for operations, maintenance, lodging and bus transportation in and around D.C., and other miscellaneous expenses. The 11 states that sent troops to support the DC National Guard were: Florida, Idaho, Indiana, Maryland, Missouri, Mississippi, New Jersey, Ohio, South Carolina, Tennessee, and Utah.
Out-of-Control Violence and Destruction Boost Interest in Gun Ownership
“The looting in many American cities has reminded everyone that the police cannot be everywhere at all times,” said Jim Woods, who leads the Successful Investing, Intelligence Report and Bullseye Stock Trader advisory services. “That means it is incumbent upon the citizen to provide for his or her own protection – and that means responsible gun ownership.”
Jim Woods tests AMMO, Inc.’s Streak non-incendiary visual ammunition near the company’s headquarters in Scottsdale, Arizona.
Interest in buying gun stocks began to grow in March after governors around the country imposed restrictions as the number of COVID-19 cases and deaths rose. These three dividend-paying gun stocks to buy stand out for their potential in an industry that has taken on increased importance since lockdowns, business closings and rioting occurred in the past few months. A key point of contention has been a series of instances when law enforcement used lethal force against African Americans.
Smith & Wesson Brands Ranks as one of the three Dividend-Paying Gun Stocks to Buy
Bryan Perry, who heads the Cash Machine, Premium Income, Quick Income Trader, Hi-Tech Trader and Breakout Profits Alert advisory services, told me he favors Smith & Wesson Brands Inc. (NASDAQ:SWBI), a Springfield, Massachusetts-based manufacturer of firearms and ammunition, along with Sturm Ruger & Co. (NYSE:RGR), a Southport, Connecticut, provider of guns for hunting, target practice and home protection.
Smith & Wesson announced on June 1 that it will split from American Outdoor Brands, Inc., to create a firearms business and a separate outdoor products and accessories provider. The spin-off of the outdoor products and accessories business will take the form of a tax-free stock distribution to stockholders in late summer 2020, with the formation of two independent publicly traded companies: Smith & Wesson Brands, Inc., and American Outdoor Brands, Inc.
“We believe that separating into two independent public companies will allow each organization to better align its strategic objectives with its capital allocation priorities,” said Chairman Barry M. Monheit. “We also believe that this action will give the investment community clearer insight into the value creation potential in each of these independent companies, ultimately driving enhanced stockholder value.”
Chart courtesy of www.StockCharts.com
Sturm Ruger Joins List of Three Dividend-Paying Gun Stocks to Buy
Sturm Ruger & Co., a firearm manufacturing company, produced quarterly results in May that beat analysts’ estimates as revenue grew more than 8% on a year-over-year basis to reach $123.6 million, while earnings per share gained nearly 18%. The stock also offers a 1.02% dividend yield.
Chart courtesy of www.StockCharts.com
Paul Dykewicz interviews Bryan Perry at the MoneyShow in Orlando, Florida.
“Gun stocks can be tricky because people tend to stockpile weapons ahead of a perceived threat to regulate or restrict ownership,” said Hilary Kramer, host of a national radio program called “Millionaire Maker.”
As a result, traditional gun stocks perform best in the market when lobbying efforts to control weapons are most vocal, continued Kramer, who leads the Value Authority and GameChangers advisory services. Gun sales tend to slow when such efforts and threats to America’s Second Amendment rights to keep and bear arms fade, she added.
“I’ve seen this pattern test shareholder confidence over the years, but the bright spot is always the ammunition makers,” Kramer said. “The thing about ammo is that it gets used up and you need to buy more.”
Olin Corp. Gains Berth Among the 3 Dividend-Paying Gun Stocks to Buy
Kramer’s favorite gun stock is Olin Corp. (NYSE:OLN), which pays a 7.5% dividend yield and has been making Winchester cartridges since 1931. As a result, even if the stock goes nowhere, which she said was unlikely, patient investors should be rewarded.
Chart courtesy of www.StockCharts.com
“OLN hasn’t cut its dividend or missed a payment in a quarter century,” Kramer said. “I see no reason for that to happen here.”
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19
Bob Carlson, leader of the Retirement Watch advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, told me the key problem he has with buying gun and ammunition stocks is that they are more prone to boom-and-bust cycles than other equities.
“Going back to early in the Obama administration, the industry had periods when sales exceeded demand because of worries that strong gun control regulation would be enacted,” Carlson said. “The stocks of related companies soared. The gun sales would collapse after a few months, and the stock prices would follow.”
Carlson further cautioned that major gun manufacturers have been “in and out of bankruptcy” because these cycles make it impossible to engage in reasonable long-term planning. The companies loaded up on debt to boost production to meet demand, which then “collapsed” and left the gun makers unable to pay the interest and principal on their borrowings.
The recent surge is likely to follow the same pattern. The pure plays in this sector are small companies without a lot of capitalization. Buying here is a high-risk trade dependent on media reports.
Women Become Buyers of Guns as Their Personal Safety is Threatened
My former colleague Emily Miller became a gun owner years ago after money was stolen from her purse while she was housesitting in Washington, D.C. She navigated many gun registration obstacles to finally gain ownership of a firearm for personal protection.
A cum laude graduate from Georgetown University’s School of Foreign Service who served as a spokeswoman for former Secretary of State Colin Powell, Miller described her ordeal as a crime victim, fear of what may happen next and decision to learn how to use and buy a gun in her book, “Emily Gets Her Gun.” Miller, petite, athletic and opinionated, chose to learn how to defend herself, and she is far from alone as violence increasingly rages in many of America’s biggest cities.
I spoke to one female friend recently who told me seven other women joined her at a gun range to learn how to shoot firearms. Each of the women took and passed a test to become eligible to apply to buy guns. None had any prior experience with such weapons, my friend told me.
COVID-19 Creates Further Havoc as Interest Grows in Gun Ownership
Stocks achieved a huge rebound in the second quarter ended June 30 after a COVID-19-related market crash in March of first-quarter 2020. In fact, Q2 ended as the market’s top-performing quarter since 1998 and the best second quarter on record, with the S&P 500 climbing nearly 20%, while the Dow Jones Industrial Average and the NASDAQ Composite zoomed 17.5% and 30%, respectively.
The fallout of COVID-19 has led to 12,464,915 cases and 559,481 deaths worldwide, along with 3,182,385 cases and 134,067 lives lost in the United States, as of July 10. America has more than double as many cases and deaths of any other nation, including China, where COVID-19 originated.
In addition, a one-day spike in cases occurred in Florida, Georgia, Idaho, Tennessee and Utah on June 26, following recent public protests, reopening of previously locked-down businesses and resumption of activities in which many people chose not to use protective masks and social distance, as recommended by public health officials. In Florida, at least 56 intensive care units at hospitals had hit capacity on June 7 and another 35 ICUs had less than 10% of their capacity remaining, according to the state’s Agency for Health Care Administration.
These three dividend-paying gun stocks to buy provide investors with a chance to profit from the civil unrest that has affected America in recent months, despite the COVID-19 crisis that caused public health experts to urge people to stay at home to avoid spreading the infection. As so-called non-essential businesses reopen and begin to recall many laid-off workers, investors still may profit with the three dividend-paying gun stocks to buy as a presidential election approaches this November.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is 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 previously served as business editor of Baltimore’s Daily Record newspaper. 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. The book is endorsed by Joe Montana, Joe Theismann, Ara Paseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.