Three Dividend-paying Aerospace Investments to Purchase

Three dividend-paying aerospace investments to purchase as they ascend appear able to withstand economic headwinds along the way.

The three dividend-paying aerospace investments to buy should rise further due to growing demand for defense and aerospace products and parts. Investors eyeing upside could see aerospace tailwinds aid their journey.

Aerospace demand in the United States is on the rise due to its national security doctrine that seeks to use military modernization to deter adversaries, while European countries’ NATO budgets are increasing to keep the countries in good standing with the alliance, according to a recent research report by Citigroup. Demand for defense-related aerospace products and parts is rising with Russia’s war against Ukraine and Middle East fighting between Israel and Hamas.

Three Dividend-paying Aerospace Investments to Purchase: Fund Fest

Company backlogs have grown 15% in the past three years and support the view that industry growth is projected at 5%, Citigroup wrote. Profit margins are likely to expand as new bookings reflect the current cost and supply chain environment, Citigroup continued.

“Look to invest in companies with accelerating revenue growth and margin expansion,” the report continued.

Bob Carlson, a retired pension fund chairman who heads the Retirement Watch investment newsletter, said key exchange-traded funds (ETFs) focus on the aerospace and defense sector. The funds could serve as an alternative purchase, he added.

Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.

Ex-Pension Fund Chair Picks SPDR S&P Aerospace and Defense (XAR)

Carlson, who makes all his recommendations in the Retirement Watch investment newsletter, told me that exchange-traded funds offer modest dividend yields that focus on the aerospace and defense sector. Two of the funds he expressed liking are among the three dividend-paying aerospace investments to purchase.

SPDR S&P Aerospace and Defense (XAR) is 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 were 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

Three Dividend-paying Aerospace Investments to Purchase: GCAD

The second of three dividend-paying aerospace investments to purchase is Gabelli Commercial Aerospace & Defense (GCAD). The ETF is fairly new, since it only has been open since early 2023.

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 the aerospace and defense industry.

Recently, about 95% of the fund was in the industrials sector and the other 5% was in technology. It owned 26 stocks and had 63% of the fund in the 10 largest positions.

The five biggest holdings recently were Moog (NYSE: MOG:A), Boeing (NYSE: BA), Spirit Aerosystems Holdings (NYSE: SPR), Ducommun (NYSE: DCO) and Curtiss-Wright. Its dividend yield is 0.89%.

Chart courtesy of www.stockcharts.com

Three Dividend-paying Aerospace Investments to Purchase: Curtiss-Wright (CW)

Davidson, N.C.-based Curtiss-Wright (NYSE: CW) lifted off as a company along with Orville and Wilbur Wright’s first flight in 1903. Also accompanying them was Glenn Curtiss, regarded as a pioneer of naval aviation. The companies, founded in 1929 by the three great aviation innovators, led to the launch of Curtiss-Wright Corporation, combining Curtiss Aeroplane and Motor Company and Wright Aeronautical Corporation. At the time of the merger, Curtiss-Wright ranked as the world’s largest aircraft company.

Curtiss-Wright focuses on innovation and advanced engineering, while applying capability to key applications in high-performance markets. Curtiss-Wright’s management aims to develop long-standing customer relationships to support significant growth and profitability in the markets it serves.

The company’s revenues are generated by providing solutions through three segments: Aerospace & Industrial, Defense Electronics and Naval & Power. Those three niches arguably are among the largest and most vital industries in the world right now.

Three Dividend-paying Aerospace Investments to Purchase: Share Repurchases

Curtiss-Wright recently announced a $300 million increase to its share-repurchase program, bringing its total authorization to $400 million. The company also declared a 5% increase to its quarterly dividend to $0.21 per share. Curtiss-Wright has repurchased more than $450 million of shares since 2021.

Curtiss-Wright hosted an investor day in New York City on May 21. The company updated its long-term organic growth strategy and introduced three-year financial targets with growth assumptions by end-market.

William Blair forecasts mid-single-digit-percentage consolidated revenue growth through 2027 for CW. The investment firm also projects operating margin to expand from 17.4% in 2023 to 17.8% in 2026.

Chart courtesy of www.stockcharts.com

Geopolitical Risk Mounts in the Middle East

The head prosecutor of the world’s top war crimes court announced on Monday, May 20, that he is seeking arrest warrants for top leaders of Israel and Hamas for “crimes” committed during their ongoing seven-month war. Named were Israeli Prime Minister Benjamin Netanyahu, his Defense Minister Yoav Gallant and Hamas leaders Yehia Sinwar, Mohammed Deif and Ismail Haniyeh. Each is accused of war crimes, along with crimes against humanity, in Gaza and Israel.

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 expressed unwavering resolve to free the hostages taken during an Oct. 7 attack against Israel.

Israel is continuing its efforts to find and destroy an extensive tunnel system in neighboring Gaza that has been used to stockpile weapons, as well as hide the Hamas leaders and militants who were responsible for the Oct. 7 attack in Israel that killed an estimated 1,200 people and took 240 hostages into Gaza.

But the Gaza Ministry of Health estimates that a total of more than 35,000 Hamas fighters and civilians have lost their lives there since the war began Oct. 7.

President Biden issued a statement describing the ICC prosecutor’s application for arrest warrants against Israeli leaders as outrageous.

“Whatever this prosecutor might imply, there is no equivalence — none — between Israel and Hamas,” Biden said in his statement. “We will always stand with Israel against threats to its security.”

Russia Maintains Death March in Ukraine

Russian forces recently penetrated the border area near Kharkiv, Ukraine’s second largest city.

They have since gained control of a number of villages on Ukraine’s northeastern section, while advancing further against Ukraine’s outnumbered and outgunned forces.

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 Russian artillery waiting 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 three dividend-paying aerospace investments to purchase as they soar toward the sky show strong demand amid ongoing wars and increased travel. Investors who want to profit can tap those opportunities while they still seem to have plenty of thrust to rise further.

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, Guru Focus 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. Special Sale! Paul 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 uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for reduced pricing on multiple-book purchases.