Regardless of any specific portfolio needs, investors must be able to identify the top dividend stocks for their specific investment strategy. Equity analysis became quite complex with the use of computer analysis and the introduction of artificial intelligence modeling. However, even with just a few basic performance metrics, investors can relatively easily narrow their selection of top dividend stocks from tens of thousands of available equities to just a handful of potential investment options.

Before focusing specifically on dividend distribution, investors should narrow the selection of potential top dividend stocks by identifying high quality stocks with a positive long-term horizon outlook. No single indicator or financial metric can identify the absolutely best candidates that could be top dividend stocks. Furthermore, equities that qualify as top dividend stocks for one investor’s specific portfolio strategy, might not fulfill another investor’s distinctive portfolio goals. Therefore, investors should use several of the financial metrics below, as well as additional indicators, to craft a specific set of analytical insights for identifying and selecting top dividend stocks that have the potential to deliver reliable and steadily rising income flow accompanied by moderate asset appreciation.

 

10 Ways for Identifying Top Dividend Stocks: #1

Stable revenue and revenue growth outlook

Investors should indeed seek investment opportunities that offer high potential for overall returns. However, high returns generally carry a high level of risk, and a lower percentage of high-risk investment deliver returns. While investors can allocate a small fraction of their funds for investing in high-risk investment vehicles, the majority of their portfolio should comprise a sturdy base of securities that offer relatively reliable returns. Therefore, companies that offer stable revenues, and have a good outlook for revenue growth, should be the main focus of investors seeking top dividend stocks.

 

10 Ways for Identifying Top Dividend Stocks: #2

Profitability

While certainly important characteristics of equities that can potentially offer substantial and reliable income payouts, stable and rising revenues are just one side of the equation. For overall stability and growth, companies must provide strong profitability. Therefore, in conjunction with steady and rising revenues, equities must minimize their costs. Only after establishing reliable net earnings can equities even consider distributing dividends to their stakeholders.

 

10 Ways for Identifying Top Dividend Stocks: #3

Dividend Payout Amount

Once an equity has the earnings to support dividend payouts, investors should obviously seek high distribution amounts. High distribution payouts translate to high cash flows, which is important to all, but especially income-focused investors. Equities pay distributions at different frequencies — monthly, quarterly, semi-annually or annually. Therefore, instead of evaluating equities on their dividend payout amounts for each period, investors must make the comparison on a total-annualized-payout basis.

 

10 Ways for Identifying Top Dividend Stocks: #4

Dividend Yield

While the absolute dividend payout amount indicates the total dividends distribution, the dividend yield is a better indicator for conveying return on an investment. With a simple ratio of the equity’s total annual dividend distribution amount and the equity’s current share price, the dividend yield is easy to calculate, and is readily available from most sources of information on investment markets.

While higher yields are obviously better, investors must make sure that the high yield stems from rising dividend payouts and not declining share prices. A sudden share price drop will result in a yield spike, which can make the equity appear more desirable than it actually is. Also, a share price spike will push the yield lower.

Therefore, investors must use the dividend yield in conjunction with other metrics to discover the top dividend stocks for their portfolio. The total return over the trailing 12-month period is an easy metric to use in these situations. As long as the one-year total return exceeds the yield, the equity has managed to provide at least minimal asset appreciation to accompany the dividend distributions.

 

10 Ways for Identifying Top Dividend Stocks: #5

Dividend Payout Ratio

Another simple metric is the Dividend Payout Ratio. This ratio indicates the share of net earnings that an equity distributes as dividend income. Investors generally consider a payout ratio in the 30% to 50% range to be optimal. Dividend payout ratios below 30% indicate that the share of earnings, which is distributed as dividends, is not substantial enough to make the equity desirable to income investors.

Alternatively, equities might not be able to sustain dividend payouts that exceed half of their net income and could end up announcing dividend cuts, or even the outright elimination of dividend distributions. However, certain types of companies, such as real estate investment trusts (REITs), pay higher payout ratios by design. Some equities must distribute at least 90% of their earnings as dividends to achieve and maintain special IRS requirements that exempt them from paying corporate taxes.

 

10 Ways for Identifying Top Dividend Stocks: #6

Dividend Coverage Ratio

The dividend coverage ratio indicates how many times an equity can pay a dividend from its current net earnings. Calculated as the inverse of the payout ratio, the coverage ratio is derived by dividing the annual earnings per share by the total annual dividend distribution. Alternatively, the coverage ratio also can be calculated by dividing net income — minus dividend payouts to preferred shareholders — by dividends applicable to common shares. Unlike the payout ratio, where lower levels are generally more desirable, investors seek a higher-dividend-coverage ratio.

 

10 Ways for Identifying Top Dividend Stocks: #7

Dividend Payout Frequency

Considering that most dividend metrics use the total annualized payout amount, some investors might overlook distribution frequency as an important metric to identify top dividend stocks. Even with identical payouts for the full year, monthly dividend payouts can deliver higher total returns over extended periods. However, to achieve these additional returns, investors must reinvest the monthly dividend distributions immediately.

The advantage of reinvesting monthly dividends, versus annual payouts, to enjoy the benefits of the compounding effect, should be obvious. However, even compared to quarterly payouts, reinvested monthly distributions offer additional returns. Assuming a total return rate of just 6% annually, monthly compounding delivers an additional 6.23% in returns, above the returns generated by reinvesting quarterly payouts.

This advantage compounds to an even greater advantage over an extended time horizon. The two-year advantage of compounding monthly dividend payouts is more than 13% and reaches 50% after just six years. Furthermore, compounding reinvested monthly payouts delivers two and five time returns over 10 and 20 years, respectively.

 

10 Ways for Identifying Top Dividend Stocks: #8

Rising Dividends

As important as all these previous metrics are, another crucial indicator is rising dividend payouts. As an equity’s share price increases, flat dividend payouts will decrease the dividend yield, which will make that equity less desirable to income investors. Alternatively, rising dividend payouts generally indicate which equities tend to outperform overall markets over the extended horizon. However, share prices tend to grow faster during bull markets, which suppresses the yield. While generally unable to keep pace with share price uptrends, rising dividend payouts can at least minimize the yield deterioration.

 

10 Ways for Identifying Top Dividend Stocks: #9

Dividend Growth Rate

Not all rising dividends are created equal. Another important indicator is the rate at which dividend payouts increase. For instance, W.P. Carey, Inc. (NYSE:WPC), boosted its dividend payout amount each quarter, for 28 consecutive hikes over the past seven years. In addition to this dividend growth streak, W.P. Carey currently offers a 5%-plus dividend yield and total returns on shareholders’ investment of more than 55% over the last five years. However, despite the long streak of consecutive quarterly dividend hikes and robust returns, which makes WPC a desirable income stock, the company’s small incremental dividend growth translates to an annualized growth rate of just 1.5%.

Alternatively, AbbVie, Inc. (NYSE:ABBV), offers a dividend yield of slightly above 5% just like W.P. Carey currently does. However, AbbVie has boosted its annual dividend payout only nine  times over the past seven years. Yet, AbbVie looks like a better choice for income investors as its dividend growth rate is nearly 20% over the same period. AbbVie’s share price did outperform WPC’s asset appreciation by six percentage points (30% versus 24%) over the last five years. However, driven by the faster rising dividend payouts, AbbVie’s total return from dividend income and asset appreciation share price of nearly 90% outpaced WPC’s total return over the same period by 35 percentage points, or nearly two-thirds.

 

10 Ways for Identifying Top Dividend Stocks: #10

Debt

Even if all the metrics listed above look positive, investors should be cautious of companies that hold high levels of debt. While most mid- and large-cap companies can still deliver stable gains over short periods, even with higher-than-average debt levels, excessive leverage over extended periods can lead to diminished earnings growth, lower dividend boosts or even dividend cuts.

The debt-to-equity ratio is a good basic measure of any company’s leverage level. To determine the debt-to-equity ratio, we divide an equity’s total liabilities by its total shareholders’ equity. Because of different portfolio strategies, different risk tolerances and other unique factors, individual investors will have different notions of what constitutes acceptable debt-to-risk ratio.

Ideally, investors would seek equities with debt-to-equity ratios below one. This indicates that the shareholders’ equity exceeds total debt. However, companies that are investing in growth and expansion will generally have more leverage. Therefore, as long as other indicators are positive and the company’s overall fundamentals are sound, it is acceptable for debt to exceed equity. However, most investors looking at a long-term investment horizon should generally avoid companies with debt-to-equity ratios above two.

 

Investors use many more performance indicators to analyze equities in search of the ones best suited for the individual portfolio strategy and goals. However, the indicators on the list above are adequate enough for even novice investors to identify a few top dividend stocks suitable for building a well-balanced portfolio with steady income distributions, and a good potential for robust capital gains.

 

Related Articles:

Best Strategies for Finding Top Dividend Stocks

5 Top Dividend Stocks to Buy Now

3 Top Dividend Stocks Yielding 5%-Plus

Top Dividend-Paying Stocks to Buy If ‘Risk-Off’ Concerns Cause a Market Retreat

---

Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.

In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.

---

 

Seven strategies to achieve successful investing start with a good plan and ideally include dividend payouts.

One particularly good plan has proven its mettle during the past 46 years to signal investors when to be in the market and when to sidestep it. The technical indicator used in this proven plan helps to protect investment gains and reduce the risk of large losses.

As of July 19, 21 of the 27 current Successful Investing recommendations in its three portfolios, Income, Growth and Tactical Trends, are profitable. Many of them are up by double-digit percentages. Multinational technology company Nvidia Corp. (NASDAQ: NVDA), of Santa Clara, California, is the undisputed standout by soaring 205.15% since its recommendation in Successful Investing.

Chart courtesy of www.stockcharts.com

Seven Strategies to Achieve Successful Investing: 1. Seek Dividends

One of the seven strategies to achieve successful investing is to seek dividends. Companies that pay dividends need to be wise about spending money to ensure the cash required to reward their loyal investors is available.

One of the newest additions to the Successful Investing newsletter led by Jim Woods is the Income Multipliers portfolio. Until recently, that portfolio had been part of a different newsletter that now is a new feature in Successful Investing.

The Income Multipliers consists of 20 stocks split between 12 industries. The industries are Consumer Discretionary, Consumer Staples, Energy, Financial, Healthcare, Industrial, Information Technology, Materials, Real Estate, Telecommunication Services and Special Situations. Each stock currently is listed as a buy and all pay dividends. The highest dividend yield of 5% is paid by Verizon Communications (NYSE: VZ), while the lowest dividend yield among the 20 recommended positions is 0.77% by Zimmer Biomet (NYSE: ZBH).

Seven Strategies to Achieve Successful Investing: 2. Use a Good Plan

The second of the seven strategies to achieve successful investing requires having a good plan and sticking to it, said Jim Woods, who heads the investment newsletter of the same name. As a featured presenter at the Global Financial Summit at last week’s FreedomFest conference in Las Vegas, Wood recommended that investors ask themselves the following questions.

• What’s your plan?
• What’s your plan to get into the market?
• What’s your plan to get out of the market?
• Do you just buy randomly?
• Do you sell randomly out of fear?

“We don’t do any of these things, because we have a proven plan,” Woods said.

Jim Woods leads the Successful Investing newsletter.

Seven Strategies to Achieve Successful Investing: 3. Proven Plan Patterns

The third of the seven strategies to achieve successful investing is to follow a proven plan like the one he uses. The plan that Woods recommends is the Successful Investing newsletter’s trend-following strategy.

Not only does the plan’s track record span more than 46 years, but it clearly signals when investors should be in the market, as well as out of it. By following a specific timeline with a specialized measurement tool, investors can be guided in how to navigate the market’s vagaries.

Seven Strategies to Achieve Successful Investing: 4. 40-Plus Years of ‘Genius’

The fourth strategy to invest successfully is to use a proven plan that has maneuvered within the markets well enough to conjure up thoughts of tapping the expertise of a “genius.” That genius, Woods said, began with Dick Fabian, founder of the Successful Investing newsletter. Dick Fabian identified the market-following strategy and used it effectively before turning the newsletter over to his son Doug Fabian, who ultimately handed the reins to Jim Woods.

   The Successful Investing Plan Signaled These Prescient Moves:

• October 15, 1987, Pre-Black Monday Sell
• January 1995 Bull Market Buy
• April 2000 Sell
• January 2008 Great Recession Sell
• March 2009 Buy
• February 28, 2020, Sell
• June 2, 2020, Buy 
• January 21, 2022, Sell
• December 2, 2022, Buy
• October 25, 2023, Sell
• November 15, 2023, Buy

Seven Strategies to Achieve Successful Investing: 5. Track the DFC

The Domestic Fund Composite (DFC) is used to provide a current snapshot of U.S. stock markets. To do so, the following funds are tracked to determine the direction of those markets.

• iShares Select Dividend ETF (DVY)
• iShares Core S&P Small-Cap ETF (IJR)
• iShares Core S&P US Value (IUSV)
• iShares Russell 1000 Growth ETF (IWF)
• SPDR S&P 500 ETF (SPY)

“The five funds that comprise the Domestic Fund Composite (DFC) represent a much better, and more accurate, measurement tool than merely using the S&P 500 or Dow,” Woods said. “By incorporating small caps, value, growth and dividend stocks, we are able to better assess the movement of the markets in relation to their key, long-term moving averages.”

Seven Strategies to Achieve Successful Investing: 6. The Key is Moving Averages

Woods, a music lover, uses the word key not only to explain its vital role in the market-trend signal plan he champions, but as an indicator of the right note to keep the market in perfect pitch.  Woods elaborated accordingly:

• What key are we in?

DFC: 39-Week Moving Average

• The Key of “Buy” or “Sell”
• The Key is to Listen to the Charts…
• We are in the key of “BUY” in domestic stocks when the DFC is trending ABOVE its 39-week moving average.
• We are in the key of “SELL” in domestic stocks when the DFC is trending BELOW its 39-week moving average.
• It is when the DFC is below this key moving average that you know it is time to sell.

Seven Strategies to Achieve Successful Investing: 7. Successful Investing Portfolios

Current favorite recommendations touted by Woods in his Successful Investing portfolios are:

Income Portfolio:

iShares Core High Dividend ETF (HDV), +15.08%

VanEck BDC Income ETF (BIZD), +6.59%

SPDR Gold Shares (GLD), +25.27%

iShares Floating Rate Bond ETF (FLOT), +4.99%

Growth Portfolio:

Invesco QQQ Trust (QQQ), +28.60%

Vanguard S&P 500 ETF (VOO), +25.50%

Vanguard Total Intl Stock Index Fund ETF Shares (VXUS), +11.07%

iShares Core S&P Small-Cap ETF (IJR), +20.55%

Tactical Trends Portfolio:

VanEck Pharmaceutical ETF (PPH), +51.63%

Global X US Infrastructure ETF (PAVE), +49.98%

Communication Services Select Sector SPDR ETF (XLC), +22.09%

CrowdStrike Holdings Inc (CRWD), +49.11%

NVIDIA Corp, (NVDA), +205.15%

CrowdStrike’s shares fell 11.1% on Friday, July 19, after the company attempted a software update that caused what may have been the biggest information technology (IT) outage in history. The fallout affected major airlines and caused the cancellation of flights, broadcasting stations and many other businesses that use the Microsoft (NASDAQ: MSFT) Windows operating system.

Chart courtesy of www.stockcharts.com

Woods told me he viewed the CrowdStrike’s double-digit-percentage drop as a “buy the news” signal. Goldman Sachs also reiterated its “buy” recommendation on the stock and wrote in a research note that the IT problem would not trigger a “material” impairment in the stock.

To simplify using the Successful Investing plan, Woods provided the following cheat sheet for investors to follow.

Successful Investing ‘Cheat Sheet’

• Be IN the market when the trend is bullish
• Be OUT of the market when the trend is bearish
• Track the market with a more complete tool
• Use the Domestic Fund Composite
• Think Musically
• Know the “Key” of the markets (Bull or Bear)
• Follow the 39-week moving average
• Follow the Growth, Income and Aggressive/Tactical Trends Portfolio recommendations
• Rely on Woods to track the trend each week in his Successful Investing hotline.
• Follow the Plan’s Buy and Sell Signals

Seven Strategies to Achieve Successful Investing: Skousen’s Forecast

Mark Skousen, PhD, who heads the Forecasts & Strategies investment newsletter, served as chairman of FreedomFest and offered his own outlook about the market. He predicted that bitcoin investments could “skyrocket.”

Skousen also asserted that the technology sector is still a “very exciting area,” especially in artificial intelligence (AI).

In addition, Skousen said he generally favors the stock market. Specifically, Skousen spoke of a bright landscape for mining stocks. He singled out uranium as a “long-term” play, and also praised the prospects for copper.

The “best-performing commodity” right now is gold, Skousen said.

Mark Skousen, scion of Ben Franklin and Forecasts & Strategies head, talks to Paul Dykewicz.

Seven Strategies to Achieve Successful Investing: Gilder’s Guidance

The investment opportunities in technology are “larger than ever before,” said George Gilder, another FreedomFest speaker, Gilder, who heads the Gilder’s Technology Report investment newsletter, is a huge fan of graphene. Gilder is predicting that the unique material will spur the world economies.

Graphene is a “foundation” for a whole new economy, he added.

Paul Dykewicz meets with George Gilder at COSM 2023.

Geopolitical Risk Includes Assassination Attempt Against Former President Trump

Geopolitical risk rose with an assassination attempt on Saturday, July 13, against former U.S. President Donald Trump, who was shot in the right ear by a gunman during a campaign rally in Butler, Pennsylvania, near Pittsburgh. The shooter killed one attendee who dove to cover his wife and daughters. A bullet from the would-be assassin struck the head of Corey Comperatore, 50, a  former volunteer fire chief, who died heroically protecting his family.

Two other attendees were seriously wounded. A Secret Service agent shot the gunman in the head from another rooftop and killed him.

Former President Trump showed resilience by appearing two days later on Monday, July 15, at the Republican National Convention with a bandage covering his right ear. Trump returned to give a 92-minute speech on Thursday, July 18, to accept his nomination as the Republican Party’s presidential candidate.

Sen. J.D, Vance, R-Ohio, accepted an offer from President Trump to run on the same ticket as the vice-presidential candidate. Sen. Vance, once a critic of President Trump, subsequently became a staunch supporter. Both have criticized U.S. government funding to help Ukraine defend itself against the invasion of its sovereign territory by Russia, contrary to President Biden’s steadfast support for the American ally.

Former President Trump also took a call of congratulations on becoming the Republican Party’s nominee from Ukraine President Volodymyr Zelensky on Friday, July 19. Trump described it as a “very good phone call.” Zelensky condemned the “shocking assassination” attempt against Trump.

Trump has expressed confidence that he will be able to bring peace to the world and end the war in Ukraine that has “cost so many lives” and devastated innocent families.

The seven strategies to invest successfully start with a good plan, include dividend payouts and consistent adherence to when to enter and exit the market. The rewards for investors can be strong total returns, regular dividend payouts and sharply reduced risk.

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 for Graduation Season! 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.

---

Cash dividends are the most common method used to distribute an equity’s earnings or assets to stakeholders in the form of cash equivalents — generally checks or direct money transfers.

Types of Dividend Distributions

Cash dividends are one of the two primary dividend distribution categories. In addition to cash dividends, equities occasionally distribute in-kind dividends. These in-kind distributions include stock dividends — the most common method of in-kind dividends — as well as property dividends, bonds of the company distributing dividends, bonds of a different corporation, government bonds, accounts receivables, promissory notes, etc.

In-kind dividends have certain advantages, especially on the equities cash flow and the investor’s tax liability. However, due to their simplicity of distribution, accounting and management, the most common type of dividend payouts are cash dividends.

Some equities make their decision regarding dividend payouts based on the financial results for every individual period. However, well-established companies with extensive historical records of dividend distributions will generally have a set dividend policy that will define the guidelines and targets for dividend distributions. Companies with defined dividend policies attract income-seeking investors more easily than equities with sporadic dividend payouts. Therefore, companies with dividend policies generally can reliably raise funding for current operations and capital expenditures, which are two important factors for long-term sustained profitability.

 

Advantages and Disadvantages of Cash Dividends

The main advantages of cash dividends are ease of distribution and ease of accounting for corporate and individual investor taxation purposes. Investors — especially those that rely on a steady inflow of dividend income to cover living expenses — enjoy the liquidity of cash dividends, which can easily be used for immediate spending, reinvesting or other purposes. Another advantage is that cash distributions do not dilute the current stock of shares, which makes the share price level relatively unaffected by the dividend payouts. The only impact is share price’s adjustment lower by the cash dividend per share amount on the ex-dividend date.

The downside of cash dividends for the distributing equity is that it affects the company’s cash position. Therefore, a company that has even a temporary cash flow problem might have to reach to other resources — such as a sale of assets or short-term borrowing — to cover the funds needed to fully cover the cash dividend distribution. Alternatively, the company might have to cut the amount of the cash dividend payout or outright cancel that period’s round of dividend distributions.

Furthermore, the drawback for investors is that cash dividend distributions are generally subject to taxation at ordinary income tax rates. These rates are usually higher than capital gains tax rates applicable to some in-kind dividends like stock dividends.

 

Distribution Frequency

Most equities’ dividend distribution schedules follow their financial reporting calendar. This alignment allows for more streamlined and simplified accounting procedures. North American companies are currently subject to quarterly financial reporting and most dividend-paying companies distribute their dividends four times per year. However, many mutual funds, Master Limited Partnerships (MLPs), Exchange-Traded Funds (ETFs), Real Estate Investment Trusts (REITs) and similar investment vehicles, opt for monthly cash dividend payouts. Furthermore, because of the local requirement to report financial results only once every six months, many companies that are based in the European Union and Japan disseminate their cash dividend distributions only twice per year. Finally, some companies also distribute their cash dividend payouts only once per year — following their year-end financial results.

 

Measuring Cash Dividends

Dividend Yield

To determine the best source of cash dividend income for their portfolio strategy, investors must evaluate several dividend metrics before making their final selection. The dividend yield is generally the first dividend metric that investors consider. This measure is a simple ratio of the company’s total annual cash dividend payout amount and the company’s share price at the time. Expressed as percentage, the dividend yield shows the total dividend income that can be expected on an investment over a one year period.

The actual total dividend payout amount over the previous year and the current share price give a trailing dividend yield figure. Alternatively, using the current period’s dividend payout amount to estimate the total annualized dividend amount expected over the subsequent 12 months indicates a forward yield.

However, while simple to calculate from two easily-accessible pieces of information, the dividend yield can be misleading, especially when using dividend yield trends for equity selection. The dividend yield and the equity’s share price are inversely proportional. Therefore, a sudden drop or a steady share price decline will result in a dividend yield increase. A higher yield generated by falling share prices means higher income returns for new investors. However, existing investors that took a position in the company’s stock at higher prices will lose much more on the asset depreciation than the gains received from cash dividend income. Therefore, additional metrics must accompany the dividend yield for a more complete equity evaluation.

Dividend Payout Ratio

One of the additional metrics is the dividend payout ratio. This ratio represents the share of net earnings that a company distributed as dividend payouts. The payout ratio is also the ratio of the annual dividend per share and the earnings per share (EPS). Investors generally consider as sustainable, over the long-term, a payout ratio in the 30% to 50% range.

A dividend payout in that range indicates that a company distributed a portion of its earnings that is sufficient to provide investors with a robust dividend income. Additionally, the payout ratio below the upper limit of that range implies that the company distributes no more than half of its earnings as dividends, which leaves enough funds for supporting other business operations.

 

Additional Considerations

Another important point of concern for equity selection is dividend growth. Even dividend distributions that increase every year generally grow slower than the share price, which results in diminished income returns. Additionally, back-tested data suggests that  equities with long records of rising dividends tend to offer higher total returns over extended time horizons than their non-dividend peers.

Also, while not a quantitative measure of cash dividend performance, investors should pay attention to the important dividend dates to maximize their cash dividend income distributions.

 

Taxation of Cash Dividends

Most cash dividend distributions are subject to ordinary income tax rates. However, the Internal Revenue Service (IRS) provides a specific set of requirements that an equity must meet to enjoy taxation at the lower capital gain rates. Generally, only a U.S. corporation or a qualified foreign corporation that is not of the type listed by the IRS as “Dividends that are not qualified dividends,” are eligible for capital gains rates. Additionally, to claim qualified status for dividend distributions investors must meet a specific stock holding period outlined by the IRS.

As defined in the Tax Cuts and Jobs Act (TCJA) passed by Congress on December 22, 2017, the following tax rates are currently in effect for all cash dividend earnings starting with the 2018 tax year.

Tax rates for ordinary cash dividends:

 

However, the cash dividend distributions that manage to attain the qualified dividend status enjoy lower rates and only three tax brackets.

 

Hopefully, this article provided a few of the basic cash dividend principles that even novice investors can use as a foundation to build their understanding of cash dividends. An extensive understanding of cash dividend nuances will allow knowledgeable investors to sidestep any potential hazards and build a robust income-generating portfolio.

---

Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.

In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.

---

 

Three dividend-paying cryptocurrency funds to purchase as Bitcoin begins a rebound can capitalize on a budding price recovery.

The three dividend-paying cryptocurrency funds to purchase could especially appeal to investors who are drawn to such investments in the wake of Bitcoin’s price plunging 27.16% from a high of $73,750.07 on March 14 to a low of $53,717.38 on July 5. The drop caused a five-month low in the price of Bitcoin, but the cryptocurrency has begun to rise again.

A key reason for the recent slump in Bitcoin prices stems from the return of about $8 billion in the cryptocurrency to creditors of a defunct Japanese cryptocurrency exchange called Mt. Gox. Also pressuring the price of Bitcoin downward is that the German and U.S. governments liquidated some of their holdings in the cryptocurrency.

Three Dividend-paying Cryptocurrency Funds to Purchase: BITO

One way to invest in Bitcoin without buying the cryptocurrency directly is through an exchange-traded fund (ETF) like ProShares Bitcoin Strategy ETF (NASDAQ: BITO). The ETF announced its monthly dividend, and it was another “whopping” $1.50 per share, according to the TNT Trader investment newsletter of Mark Skousen, PhD, a presidential fellow in economics at Chapman University, and his son Tim Skousen.

The elder Skousen, named one of the top 20 most influential living economists by SuperScholar.org, heads the monthly Forecasts & Strategies investment newsletter that focuses on stocks and funds. The TNT Trader advisory service that he runs with his son Tim provides both stock and option recommendations, as well as cryptocurrency investments.

“This has been an unexpected benefit of owning BITO at this time period, as we never intended to find a Bitcoin income play like this,” according to TNT Trader. “But since our recommendation, we have collected $6.82 a share in five months with a buy-in price of $26.91.”

Courtesy of www.StockRover.com. Learn about Stock Rover by clicking here.

If BITO sustains these kinds of payouts, it will have a dividend yield of 60%, according to the July 2 edition of TNT Trader. Even if the dividend payouts are suspended, BITO would end the year with a yield of 25%, the advisory service wrote.

“That’s a mind-blowing yield for any ETF,” according to TNT Trader.

Ben Franklin scion Mark Skousen, who leads TNT Trader, talks to Paul Dykewicz.

The U.S. government contributed to the slide in Bitcoin’s price when it announced plans to sell nearly 4,000 bitcoins that were seized due to the conviction of a drug dealer, TNT Trader informed its subscribers. However, Bitcoin has absorbed that added volume and is poised to rise again, TNT Trader wrote.

Chart courtesy of www.stockcharts.com.

Three Dividend-paying Cryptocurrency Funds to Purchase: BITO Backers

The Micro-Cap Stock Trader advisory service, led by seasoned Wall Street veteran Bryan Perry, is another advisory service that is recommending BITO. The fund invests in Bitcoin futures and not the coins themselves, he explained.

“Though BITO doesn’t track Bitcoin exactly, and the market cap of $2.95 billion is the smallest and most liquid asset that fits into our micro-cap universe, the correlation is surprisingly good and worthy of a long-side trade,” Perry advised his Micro-Cap Stock Trader subscribers.

In addition, because BITO trades futures on Bitcoin, the fund is able to generate sizeable monthly dividends from the spread it captures from its trades. Micro-Cap Stock Trader subscribers and other investors in BITO have been collecting the monthly dividend payouts since entering the trade. The enticing dividend yield has become a compelling reason to stick with the fund amid the ups and downs of Bitcoin’s price.

Bryan Perry leads the Micro-Cap Stock Trader advisory service.

Another backer of BITO is Jim Woods, a former Army paratrooper who recommends it in the Income Multipliers portfolio for his Successful Investing newsletter subscribers. As a seasoned investment guide, Woods has developed a special interest in cryptocurrency investing and follows BITO closely for his Successful Investing subscribers.

Jim Woods leads Successful Investing and co-heads Fast Money Alert.

Three Dividend-paying Cryptocurrency Funds to Purchase: BLOK

In the July 8 weekly update of Mark Skousen’s Forecasts & Strategies investment newsletter, he updated his recommendation of a crypto/blockchain exchange-traded fund (ETF), dividend-paying Amplify Transformational Data Fund (BLOK). The fund has “survived the storm” much better than Bitcoin and is up more than 21% this year, Skousen wrote to his Forecasts & Strategies subscribers.

Chart courtesy of www.stockcharts.com.

BLOK’s top holdings include Galaxy Digital Holdings Ltd. (OTCMKTS: BRPHF) (TSX: GLXY .TO), MicroStrategy Inc. (NASDAQ: MSTR), Coinbase Global (NASDAQ: COIN), Robinhood Markets Inc. (NASDAQ: HOOD), Core Scientific (NASDAQ: CORZ) and PayPal (NASDAQ: PYPL). The purchase of the fund gives shareholders exposure to some of the biggest names in blockchain.

Woods, who also is a co-leader of the Fast Money Alert advisory service with Skousen that recommends stocks, funds and options, is a fellow fan of Amplify Transformational Data Fund and its call options. In November 2023, the Fast Money Alert advisory service subscribers watched a recommendation of BLOK call options jump more than 120% in just a few weeks. Rather than leave that big potential gain at risk, the seasoned leaders of that advisory service recommended that their subscribers sell half to take triple-digit percentage profits, while letting the rest ride in pursuit of additional gains.

“We simply do not want to miss out on preserving our initial capital,” the Fast Money Alert leaders wrote.

Three Dividend-paying Cryptocurrency Funds to Purchase: IBLC

A third dividend-paying cryptocurrency fund to purchase is iShares Blockchain and Tech (IBLC) that launched in 2022, said Bob Carlson, the leader of the Retirement Watch investment newsletter who recently retired as the chairman of a pension fund. It seeks to track an index composed of global companies involved in the development, innovation and use of blockchain and digital technologies. The index uses a rules-based method to change its holdings as companies in the blockchain universe and the technology evolves.

The fund recently had 41 positions with the 10 largest ones accounting for 68% of the portfolio. Top holdings were Marathon Digital Holdings (NASDAQ: MARA), Cleanspark (NASDAQ: CLSK), Coinbase Global (NASDAQ: COIN), Hut 8 (NASDAQ: HUT) and TeraWulf (NASDAQ: WULF). The turnover ratio is about 68%.

About 90% of the fund is in North America-based companies. The next largest region is Australia/Asia.

The fund is up 10.35% for the year to date and 48.17% over 12 months. It is up 5.89% in the last four weeks, but down 3.63% in the last week. The recent dividend yield was 1.28%.

Chart courtesy of www.stockcharts.com.

NATO Meeting Addresses Russia’s Invasion of Ukraine

NATO’s 75th Anniversary Summit in Washington, D.C., concluded on July 11, with the 32 allies making decisions to strengthen deterrence and defense, bolster long-term support to Ukraine and deepen global partnerships. Allied leaders met with representatives of Australia, Japan, New Zealand, South Korea and the European Union to address shared security challenges.

With a growing alignment of Russia, China, Iran and North Korea, NATO is working increasingly closely with partners in the Indo-Pacific and with the European Union to help preserve peace and protect international order. NATO Secretary General Jens Stoltenberg highlighted that China is a decisive enabler of Russia’s war against Ukraine. The Washington Summit declaration refers to the strategic partnership between Russia and China as a “cause for profound concern.” 
 
Ukrainian President Volodymyr Zelensky joined allied leaders at the summit for a meeting of the NATO-Ukraine Council on July 11 at the level of Heads of State and Government. Secretary General Stoltenberg affirmed allies support Ukraine on its “irreversible path” to NATO membership. 

On July 10, NATO allies agreed to establish Security Assistance and Training for Ukraine to coordinate providing military equipment and training. NATO announced a pledge of long-term security assistance to Ukraine with a minimum baseline of 40 billion euros in the next year.

“This pledge will ensure greater burden-sharing of military support,” Stoltenberg said in a prepared statement. “It will also provide Ukraine the reliable support it needs to deter and defend against future Russian aggression now and in the future.”

NATO allies have signed 20 bilateral security agreements with Ukraine thus far as Russia continues its invasion and attacks of its neighboring nation. Stoltenberg confirmed the allies agreed to establish a NATO-Ukraine Joint Analysis, Training and Education Centre in Poland.

U.S. President Biden’s Gaffes Gain Glare of NATO Summit Spotlight

President Joe Biden, whose cognitive capabilities came into question during his June 27 debate against former President Donald Trump, gained the glare of the NATO summit spotlight when he mistakenly introduced Ukrainian President Volodymyr Zelenskyy as “President Putin” on stage. It occurred at a ceremony marking the signing of a NATO security agreement for Ukraine.

The gaffe occurred as Biden wrapped up a speech about NATO’s enduring support for Ukraine. Biden barely stuttered during his remarks as he pledged security guarantees from Western countries even upon the end of the current war in Ukraine started and continued by Russia’s President Vladimir Putin. President Biden quickly corrected himself.

However, Biden also mistakenly called Vice President Kamala Harris by the wrong name, referring to her as “Vice President Trump.” So far, Biden is vowing to continue his campaign and seek re-election, despite some Democrats in Congress questioning the wisdom of that plan.

The three dividend-paying cryptocurrency funds to purchase are rebounding after recent share price weakness. For investors who like to purchase equities when the price pulls back, the opportunity has arrived with three dividend-paying cryptocurrency funds.

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 for Graduation Season! 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.

Ten Things You Need to Know about REITs offer important tips for investors.

REITs (real estate investment trusts) are unique investments that provide a convenient way for investors to gain exposure to real estate markets, and reap the financial benefits that those markets have to offer. Keep reading to learn 10 things you need to know about REITs. 

 

 

10 Things You Need to Know About REITs #1: There are Different Types

 

REITs can be classified into four categories: equity, mortgage, public non-traded and private. 

• Equity REITs: Equity REITs own or operate income-producing real estate, and they are publicly traded on major stock exchanges. Equity REITs are often simply referred to as REITs.
• Mortgage REITs: Also known as mREITs, mortgage REITs provide financing for real estate by buying or originating mortgages and mortgage-backed securities. mREITs earn income from the interest on the investments.
• Public Non-Traded REITs: Public, non-traded REITs are registered with the SEC but do not trade on national stock exchanges.
• Private REITs:  Private REITs are exempt from Securities and Exchange Commission (SEC) registration and the shares do not trade on public stock exchanges.

Furthermore, REITs can be classified by the type of properties in which they choose to invest.  For example, REITs may be categorized as residential, office space, retail, health care, lodging, and more. REITs with different portfolios operate in different real estate markets, making it important for investors to research REITs before investing in any of them.  

 

 

10 Things You Need to Know About REITs #2: How to Invest

 

If a REIT is listed on a major stock exchange, investors can easily buy shares the same way any other public stock is purchased. The majority of REITs are equity REITs, which are all listed on public stock exchanges.

Investors also can invest in a REIT mutual fund or a REIT ETF (exchange-traded fund), through which the investor would be buying a collection of shares in an entire index of REITs. Private REITs and Public non-traded REITs can also be purchased; however it is more complicated. Those investments are generally limited to individuals and institutions who meet certain financial criteria.

 

 

10 Things You Need to Know About REITs #3: How REITs Make Money 

 

Generally, REITs follow a simple business model: the company buys or develops properties that it leases out and collects rent as its primary source of income. The income generated by the company is paid out to shareholders in the form of dividends. REITs may also make money through buying and selling properties. 

However, some REITs do not own any property, choosing instead to work on financing real estate transactions. These REITs generate income from the interest on the financing. Mortgage REITs are one such REIT that does not own any property.

 

 

10 Things You Need to Know About REITs #4: Often Volatile, But Can Produce Strong Long-Term Returns 

 

Given that REIT performance is subject to market risk, REITs can be a volatile investment. REIT performance fluctuates in conjunction with changes in the real estate market.

There are certainly periods when REITs underperform, but the long-term performance of REITs is impressive. The five-year return of U.S. REITs was 15.76% in June 2020, as measured by the MSCI U.S. REIT Index. Additionally, REITs have historically outperformed corporate bonds over extended periods of time. 

 

 

10 Things You Need to Know About REITs #5: Great for Providing Diversification 

 

Real estate is an important asset class that investors should consider buying as part of a well-rounded portfolio. Real estate provides great diversification because it is a distinct asset class which does not have a strong correlation with other industries within the stock market. Historically, REIT performance tends to go up when other assets go down and vice versa. Therefore, REITs are largely beneficial in leveling out the overall volatility of a well-diversified portfolio.  

 

 

10 Things You Need to Know About REITs #6: Differ From Direct Real Estate Buys 

 

When looking to gain exposure to real estate markets, there are two possible routes for investors to take. Investors can either invest in REITs, or make a direct investment into real estate. In the former choice, investors become shareholders in a company that controls real estate. In the latter, an investor buys tangible real estate and operates it for his or her own financial benefit. 

Direct real estate investors make money through rental income and appreciation. REIT shareholders gain money as the value of the REIT goes up, and through dividend payouts. REITs are an easier way to gain exposure to real estate, as there is no personal responsibility to maintain and operate any properties.

 

 

10 Things You Need to Know About REITs #7: Their Investing Advantages

 

REIT investments bring multiple benefits to the investor. REITs offer the benefits of real estate investment, but with the convenience and simplicity of investing in publicly traded stock. As previously mentioned, REITs also provide diversification because they are not correlated with other stocks and bonds. REITs also provide higher risk-adjusted returns, and REITs effectively reduce overall portfolio volatility. 

REITs also give investors the benefit of receiving consistent, reliable dividend payouts. Plus, the long-term performance of REITs has been strong, as the total returns from REITs have been above that of the S&P 500 over the last 25 years. Finally, REITs are highly liquid, which eliminates the illiquidity risks that are usually associated with real estate investments.

 

 

10 Things You Need to Know About REITs #8: Their Investing Risks

 

REITs are sensitive to changes in the market, specifically fluctuations in interest rate. Rising interest rates are bad for REIT stock prices. REITs are subject to market risk, and REITs may underperform if market conditions are not ideal. 

There are also property-specific risks associated with REITs. While investing in REITs provides diversification for the investor’s portfolio, most REITs do not hold diversified property portfolios. In other words, REITs that only hold one type of property may face serious financial distress if an event occurs that decreases the demand for such a property. For example, hotel REITs have taken a considerable hit throughout the Covid-19 pandemic, as travel has decreased and the demand for hotels has diminished.

Another shortcoming of REITs is that most of them grow at a slower pace than some other publicly traded companies in different industries. REITs are required to pay out 90% of taxable income to shareholders. Therefore, the company is generally only left with 10% of its income to reinvest into the core business each year. This may cause REITs to grow at a slow pace. In the same vein, REITs may rely heavily on debt in order to have more money available to invest in new properties. Many REIT managers choose to add leverage (take on debt) in order to expand the properties owned by the REIT.

Finally, the tax treatment of REITs presents a potential drawback for investors. The REIT does not have to pay taxes on profit, however investors must pay income tax on the dividend payouts as if those payouts are personal income. Investors can be faced with high REIT taxes, especially those in higher tax brackets. Other companies that are not required by law to pay dividends may be a more tax efficient investment.

 

 

10 Things You Need to Know About REITs #9: How Their Dividends are Taxed

 

REIT shareholders face an income tax liability that can be complex and difficult to understand. Each dividend payout from the REIT to its shareholders is composed of a mix of funds that are acquired by the REIT from an array of sources. Profits earned by the REIT from different sources can be placed into different categories, and each category has its own specific tax rules. Therefore, investors do not always pay the same tax rate on the distributions received from the REIT. Rather, the payout must be dissected and categorized to determine the tax treatment. 

Dividend distributions may be allocated to three categories: operating profit, capital gains and return of capital.

Oftentimes, the dividend payouts are only made up of operating profit. When the company passes along operating profit to investors, it is received as ordinary income, and therefore the investor must pay his or her ordinary income tax rate on the dividend.

When the distributions consist partially of capital gains or return of capital, the tax rate that the investor must pay is different. To read about the taxation rules in these scenarios, click here. 

However, it is most common that the payout consists only of operating profit, in which case the investor must pay his or her ordinary income tax.

 

 

10 Things You Need to Know About REITs #10: Passive vs. Active Investing 

 

When deciding to invest in REITs, there are two main approaches: passive and active investing.

The passive investing approach entails investing in a REIT mutual fund or REIT ETF. In these options, investors buy an entire portfolio of REITs. Buying a collection of REITs has its benefits, including wide REIT diversification and little requirement of time and knowledge. However, this approach means buying every REIT in the index, regardless of considerable factors such as price, performance and quality. 

The active REIT investing approach involves doing research, picking specific REITs to invest in and building an individual portfolio of REITs. This would entail finding REITs that the investor believes to be undervalued, or REITs that are a smart investment for another reason. The active approach is certainly more time consuming, and can be risky, but it has the potential to provide far greater returns than the passive approach if it is well executed

 

Want more? Read our related articles:

The Ultimate Guide to Investing in REITs

Why Do REITs Have High Dividend Payout Ratios?

How Risky are REITs? 

The 13 Types of REIT Stocks and How to Invest in Them 

Investing in REITs: Pros and Cons 

What is a REIT?

---

Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.

Six dividend-paying satellite stocks to purchase are gaining a lift from rising demand for launches and the industry’s expanding role in supporting national defense.

The six dividend-paying satellite stocks to purchase have earned the recommendation of seasoned industry observers who are forecasting which companies should gain a boost from the latest advanced services. The wars started by Russia with its invasion of Ukraine in February 2022 and by Hamas militants with its murderous attack of residential communities in Israel last Oct. 7 have only fueled demand for satellite services to provide military applications, as well as aid commercial users.

The six satellite stocks to purchase are benefitting from reduced prices for putting spacecraft into orbit due to the advent of reusable rockets. To protect freedom, the U.S. Department of Defense and countries in the North Atlantic Treaty Organization (NATO) are providing weapons, equipment and satellite reconnaissance to Ukraine in its defense of its sovereign territory against Russia’s invasion that began on February 24, 2022.

Six Dividend-paying Satellite Stocks to Purchase Shine With Defense Spending

Defense spending, in particular, is on the ascent amid mounting geopolitical security risks, according to BofA Global Research. A recovery in the commercial satellite and space sectors appears potent enough to overcome economic uncertainty, BofA continued.

In the United States, the Space Force-operated Defense Support Program (DSP) satellites are a key part of North America’s early warning systems. In their 22,300-mile, geosynchronous orbits, DSP satellites help protect the United States and its allies detect missile launches, space launches and nuclear detonations.

The DSP satellites use an infrared sensor to detect heat from missile and booster plumes against the Earth’s background. Technological advancements to ground processing systems dating back to 1995 enhanced detection capabilities of smaller missiles to improve warnings of attacks by short-range missiles against U.S. and allied forces.

U.S. Defense Strategy Sparks Growth

U.S. National Defense Strategy addresses the need to use deterrence as a primary way to protect the homeland and modernize military preparedness, wrote Jason Gursky, an aerospace and defense analyst with Citigroup. The U.S. government is investing in nuclear defense capabilities, as well as conventional military planes, ships and tanks, he added.

In addition, the U.S. Department of Defense is funding an initiative called Joint All-Domain Command and Control – whose primary mission is to reduce timelines between “sensors and shooters” to provide further “deterrence and tactical advantage,” Gursky wrote in a recent research note.

“This is being done through the proliferation of sensors across the space, land, air and sea domains and the ability to quickly analyze vast amounts of data using AI,” Gursky continued. “In our view, investments in this initiative support higher defense spending through the end of the decade, and that a rising tide will lift all boats – with most contractors benefiting from it.”

Rocket Lab Achieves 50th Launch

Several companies engaged in the satellite and space businesses have received “buy” recommendations from Citigroup. One is non-dividend-paying Long Beach, California-based Rocket Lab USA, Inc. (NASDAQ: RKLB), a global launch services and space systems provider.

On June 20, Rocket Lab announced it successfully launched its 50^th Electron mission to deploy satellites for France-based Kinéis, an Internet-of-things (IoT) company. Rocket Lab reported that Electron reached the milestone of 50 launches faster than any commercially developed rocket in history. Both Citigroup and BofA Global Research are among investment firms that recommend Rocket Lab as a buy.

In addition, prime contractors now appear willing to buy dedicated launch vehicles to support internal research and development (IRAD) projects – something previously not seen in any great numbers, Gursky wrote in a research note.

A recent $515 million award by the Space Development Agency (SDA) is a verification of the company’s products and technical prowess, following a commercial award on a Globalstar (NYSE American: GSAT) low-earth orbit (LEO) program. These two programs together show customer adoption of the company’s satellite products is accelerating, and the recent improvement in liquidity is likely to allow for more seamless execution on this backlog as the company expands capacity and working capital.

Six Dividend-paying Satellite Stocks to Purchase: Honeywell (NYSE: HON)

Another of the companies involved heavily in the satellite and space business gaining a “buy” recommendation from Citigroup is Honeywell International Inc. (NASDAQ: HON), a Charlotte, North Carolina-based manufacturer of aerospace and automotive products; residential, commercial and industrial control systems; specialty chemicals and plastics and engineered materials.

The company announced a $1.9 billion acquisition of CAES Systems Holdings LLC (CAES) from private equity firm Advent International on June 28 to enhance its defense technologies in space, air, land and sea. CAES’ high-reliability radio frequency technologies have the potential to help Honeywell drive long-term growth and further diversify revenue streams in the defense industry.

Courtesy of www.StockRover.com. Learn about Stock Rover by clicking here.

Honeywell is a current profitable recommendation in the Flying Five portfolio of the Forecasts & Strategies investment newsletter led by Mark Skousen, PhD, an economist who serves as a Presidential Fellow at Chapman University. The Flying Five stocks consist of the five high-dividend-paying Dow stocks with the lowest prices, Skousen said. He has been recommending a Flying Five Portfolio each year since the early 1990s. Those stocks typically outperform the market.

Ben Franklin scion Mark Skousen, head of Forecasts & Strategies, talks to Paul Dykewicz.

Honeywell has a tradition as a space and satellite company that includes serving NASA with the Apollo moon landing missions. Roughly 1,000 satellites, or 80% of those currently in orbit, have Honeywell components on board, according to company officials.

Citigroup rates Honeywell as a “buy” due to its solid long-term earnings-per-share (EPS) growth potential, despite an uncertain macro environment. Short-cycle weakness should ease over time and longer-cycle end markets, particularly aerospace, could stay resilient and let the company remain well positioned in secular growth markets such as automation and digitalization, Citigroup wrote in a recent research note.

Plus, recent structural cost actions could drive better-than-expected operating leverage in a growth environment, Citigroup continued. Finally, accelerated cash deployment and an under-levered balance sheet with good cash flow could spur further upside over time, Citigroup concluded.

Chart courtesy of www.stockcharts.com.

Six Dividend-paying Satellite Stocks to Purchase: Booz Allen Hamilton (NYSE: BAH)

Booz Allen Hamilton (NYSE: BAH), a McLean, Virginia-based recommendation from the Chicago-based investment firm William Blair, has advanced after reporting fourth-quarter revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) above consensus analysts’ estimates during late May. The dividend-paying defense stock’s management issued its fiscal 2025 guidance above consensus on the strength of its pipeline of opportunities and hiring trends offset by potential election and geopolitical disruptions.

Booz Allen’s artificial intelligence (AI) and machine learning (ML) Databricks partnership for the Advana platform has been a major growth driver, wrote Louie DiPalma, a William Blair aerospace and defense analyst. The industry continues to benefit from a strong 2023 defense budget, a favorable hiring environment and wage inflation, he added.

“Headcount trends and strong bookings will likely continue to be the main drivers of revenue growth, and both are in the firm’s favor,” DiPalma continued. “Over the past few years, Booz Allen has won elite contracts for cybersecurity (Thunderdome, CDM DEFEND, CyPrESS), data analytics (Advana, CDC DMA), artificial intelligence (EMAPS, the JAIC, Space Force remote sensing) and augmented reality (Army digital soldier, soldier as a service). We view the stock as artificial intelligence at a reasonable price (AARP) and see upside of greater than 15% over the next year.”

Chart courtesy of www.stockcharts.com.

Booz Allen Hamilton Stock Has Produced Investing Profits

Another fan of Booz Allen Hamilton is Jim Woods, a former Army paratrooper who has recommended the company profitably. Even though Woods has a large defense contractor in the Income Multipliers portfolio of his Successful Investing newsletter, he also likes dividend-paying Booz Allen Hamilton.

Jim Woods leads Successful Investing and co-heads Fast Money Alert.

As a former military man, Woods has a personal interest in defense and cyberspace, following them closely for subscribers of his Successful Investing newsletter and his trading services such as Bullseye Stock Trader, High Velocity Options and Fast Money Alert. He co-heads the latter service with Mark Skousen, PhD, who also leads the Forecasts & Strategies investment newsletter.

Dividend-paying Booz Is a Bullseye Buy 

Subscribers of Bullseye Stock Trader collected a profit of 21.67% in 2019 when Woods recommended the stock for slightly more than three months. He also recommended related call options in Bullseye Stock Trader that produced a profit of 166.67%.

Fast Money Alert subscribers gained 9.59% after only about a month late in 2022 with a follow-up recommendation of Booz Allen Hamilton. A related call option recommendation in Fast Money Alert for Booz Allen Hamilton produced a 239.27% profit in less than one month.

Bryan Perry, who leads the Cash Machine investment newsletter, generated a 25% gain in BAH options for his subscribers in the Breakout Options Alert advisory service in less than three weeks last May.

Bryan Perry leads the Breakout Options Alert advisory service.

Portia Capital President Adds Affirmation in Her Analysis of Booz 

Michelle Connell, owner and president of Dallas-based Portia Capital Management LLC, is yet another fan of Booz Allen Hamilton. Focused on wealth management for private investors and non-profit institutions, Connell advised that the company has “robust fundamentals” and has generated more than a half billion dollars in free cash flow each year for the last 10 years. Its return on equity is well over 50%, she added.

Plus, the company’s revenue growth is in excess of 15% a year. Expect this to increase given the demand for AI-related consulting services, Connell continued.

The stock’s dividend yield of 1.3% likely will increase, amid ascending AI demand. Another positive is Booz’s strong free cash flow, she added. Plus, there is no short interest in the stock, meaning no one is willing to go against BAH and its stock performance, Connell concluded.

Michelle Connell leads Dallas-based Portia Capital Management.

Six Dividend-paying Satellite Stocks to Purchase: Motorola Solutions (NYSE: MSI)

Chicago’s Motorola Solutions Inc. (NYSE: MSI) is rated as outperform by DiPalma, the aerospace defense analyst with investment firm William Blair. Motorola Solutions offers regulated telecom services that include wireline, wireless and satellite networks, integrated into ASTRO Connectivity Services (ACS). Satellite resiliency has become an integral part of Motorola’s ASTRO Connectivity Service offer.

Motorola trades at roughly 27 times the investment firm’s forward-year (2025) earnings per share (EPS), a premium to the company’s 21-times February 2020 pre-pandemic multiple and in line with its November 2021 peak multiple, DiPalma wrote in a recent research note.

“In our view, Motorola can maintain this premium multiple over the next year as it demonstrates its resiliency to macro pressures and law enforcement budgets remain robust,” DiPalma wrote. “Record demand for public safety communications, video security and command center software should drive long-term EPS growth in the low double digits when taking into account organic growth, acquisitions and stock buybacks.

“We believe the annual stock return should at least match EPS growth. Accordingly, we reiterate our outperform rating. In our view, the primary risk to Motorola shares is valuation multiple compression from decelerating revenue growth.”

Chart courtesy of www.stockcharts.com.

Six Dividend-paying Satellite Stocks to Purchase: Lockheed Martin (NYSE: LMT)

Lockheed Martin (NYSE: LMT), a Bethesda, Maryland-based aerospace and defense company, recently received a 12-month price target of $525 and a buy recommendation from Citigroup. The company is a combination of a 1995 merger between Lockheed Corporation and Martin Marietta Materials, Inc.

In its enlarged form, Lockheed Martin focuses on defense, space, intelligence, homeland security and information technology. The company operates the key business segments such as Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space.

Lockheed Martin’s management recently gave guidance that margins are likely to trough in 2024 and head toward 11%-plus over time, driven largely by product mix, Citigroup wrote in a recent research note. The loss-making classified contract at Lockheed Martin’s MFC business will be a tailwind in 2025, i.e., lower forward loss charges, while the rest of the margin accretive MFC portfolio is likely to grow faster than the remainder of the company. Further, new awards across the company face the current cost environment and should produce margins higher than pre-pandemic backlog, according to the Citigroup research note.

Lockheed Martin recently announced it awarded privately held Firefly Aerospace a contract for 15 launches, including options for 10 additional ones in the future. Firefly’s Alpha rocket is in a unique position with 1,000 KG of payload capacity, offering much more than Rocket Lab. Industry launch giant SpaceX offer greater capacity, leaving a niche for Firefly to meet the needs of defense contractors like Lockheed Martin for certain missions, Citigroup’s aerospace analyst Gursky wrote.

Chart courtesy of www.stockcharts.com.

Six Dividend-paying Satellite Stocks to Purchase: SAIC (NASDAQ: SAIC)

Reston, Virginia-based Science Applications International Corp. (NASDAQ: SAIC) provides defense, space, civilian and intelligence markets services to the U.S. government to produce $7.2 billion in annual revenues. The government contracts give SAIC a stable, recurring revenue base, significant margin expansion opportunities and a strong cash flow.

SAIC has a history of creating shareholder value through dividend payouts, share repurchases and acquisitions. The company further is carving out a role in artificial intelligence by recently launching Tenjin GPT, a new internal, generative artificial intelligence (AI) resource. The capability is aimed at harnessing cutting-edge AI capabilities to automate and optimize business processes.

Tenjin GPT is an example of using technological innovation to provide real-time insights and data analysis, enhancing creativity and collaboration. In addition, Tenjin GPT is the latest feature of SAIC’s data science platform, leveraging the power of OpenAI’s GPT to give users access to the latest advancement in natural language processing.

The state-of-the-art AI model enables users to develop sophisticated applications, to automate repetitive tasks, to streamline processes and to gain insights from data. Powered by Microsoft’s Azure AI, the framework is intended to ensure seamless integration and scalability.

SAIC offers solutions in mission intellectual technology (IT), enterprise IT, engineering services and professional services. The company aims to integrate emerging technology into mission critical operations to modernize and enable critical national imperatives.

Also, in May, the company won a $232 million contract to develop intelligence and electronic warfare systems for the U.S. Army. The contract is part of the Department of Defense Information Analysis Center’s (DoD IAC) multiple-award contract (MAC) vehicle. These DoD IAC MAC task orders (TOs) are awarded by the U.S. Air Force’s 774th Enterprise Sourcing Squadron to develop and create new knowledge to enhance the DTIC repository and the research and development (R&D) and science and technology (S&T) community.

Bargain-hunting investors may find now is a good time to invest in SAIC. The stock dropped recently but appears to be trending up again, as shown by the chart below.

Chart courtesy of www.stockcharts.com.

Six Dividend-paying Satellite Stocks to Purchase: General Dynamics (NYSE: GD)

General Dynamics (NYSE: GD), headquartered in Falls Church, Virginia, provides land combat vehicles, weapons systems and munitions, ship construction and repair, and technology products and services. In addition, General Dynamics is a leader in the business aviation industry through its Gulfstream and Jet Aviation subsidiaries. Overall, General Dynamics operates in four main segments: Combat Systems, Aerospace, Marine Systems and Technologies.

The company notched an overall operating margin of 11.0%. It also produced margins of 15% in Aerospace, 14.4% from Combat Systems, 9.5% with Technologies and 7.6% by Marine Systems. Citigroup rates shares of General Dynamics as a “buy.”

Citigroup recommended building positions in the company due to:

1) An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years;

2) Marine segment growth prospects and improved margins as the company’s labor force and supply chain normalize post-pandemic;

3) Rising demand for the Combat Systems segment as the United States and its NATO allies prepare plans for increased military spending to deter further land-based conflicts in Europe; and

4) Increasing valuation for defense prime contractors.

Chart courtesy of www.stockcharts.com.

Six Dividend-paying Satellite Stocks to Purchase as Geopolitical Risk Rises

Geopolitical risk remains high. An strengthened alliance recently announced by Russia and North Korea is adding to the danger of ongoing wars in the world. Experts speculate China’s leaders must be concerned about a possible loss of influence over North Korea after the latter country’s leader Kim Jong Un and Russian President Vladimir Putin signed a pact, according to the Associated Press.

The alliance not only gives Russia additional access to arms and military equipment, as well as potential new soldiers to mount new attacks on Ukraine, but it could worsen stability on the Korean Peninsula. China’s leaders face what could be the strongest Russia-North Korea partnership since the Cold War.

That increased risk comes as the Middle Eastern conflict in Gaza between Israel and Hama shows no near-term end, despite continued talks about a ceasefire. Israel is seeking the return of hostages taken from its land during the Oct. 7 assault of communities near Gaza.

Israeli leaders are trying to find and destroy an extensive tunnel system in neighboring Gaza that has been used to store weapons, as well as hide the Hamas leaders and militants who were responsible for the raid in Israel that killed an estimated 1,200 people and took 240 hostages into Gaza. Clashes continue in the city of Rafah in Gaza, where Hamas militants remain in the midst of a large Palestinian civilian population.

The Gaza Ministry of Health estimates that more than 37,925 Hamas fighters and Palestinian civilians have lost their lives since the war began Oct. 7.

Meanwhile, Russia continues trying to seize additional land in Ukraine. To stiffen Ukraine’s defense against Russia’s unrelenting attacks, Western governments have been providing additional arms and equipment, as well as allowing some of it to be used against military targets that previously had been declared off-limits.

The six dividend-paying satellite stocks to purchase are benefitting from strong and increasing demand. Investors who seek share price appreciation and income should find it among the six dividend-paying satellite stocks that provide compelling services in an array of orbits.

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 for Graduation Season! 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.

Five dividend-paying space stocks to buy as launch vehicles increasingly lift off into the sky offer investors opportunities to profit from capital appreciation and income accumulation.

The five dividend-paying space stocks to buy are recommended by seasoned industry observers who are forecasting increased space and satellite missions taking flight. As wars rage in Ukraine, Gaza and elsewhere on Earth, demand is rising for companies engaged in commercial ventures, along with the U.S. military and its allies.

The five space stocks to buy are benefitting from soaring demand for launch and satellite services. All five have tailwinds to motor forward. A key catalyst comes from increased military demand by the U.S. Department of Defense and countries in the North Atlantic Treaty Organization (NATO) amid Russia’s continuing invasion of Ukraine that began on February 24, 2022.

The result is a recovery in the commercial space business that appears strong enough to overcome economic uncertainty, according to BofA Global Research. Defense spending, in particular, also is on the ascent amid mounting geopolitical security risks, BofA added.

U.S. Defense Strategy Fuels Growth

U.S. National Defense Strategy addresses the need to use deterrence as a primary way to protect the homeland and modernize military preparedness, wrote Jason Gursky, an aerospace and defense analyst with Citigroup. The U.S. government thereby is investing in its nuclear defense capabilities, as well as conventional military planes, ships and tanks, he added.

In addition, the U.S. Department of Defense is investing in an initiative called Joint All-Domain Command and Control – whose primary mission is to reduce timelines between “sensors and shooters” to provide further “deterrence and tactical advantage,” Gursky wrote in a recent research note.

“This is being done through the proliferation of sensors across the space, land, air and sea domains and the ability to quickly analyze vast amounts of data using AI,” Gursky continued. “In our view, investments in this initiative support higher defense spending through the end of the decade, and that a rising tide will lift all boats – with most contractors benefiting from it.”

Five Dividend-paying Space Stocks to Buy: Honeywell (NYSE: HON)

Several companies involved heavily in the space business have received “buy” recommendations from Citigroup. One of them is Honeywell International Inc. (NASDAQ: HON), a Charlotte, North Carolina-based manufacturer of aerospace and automotive products; residential, commercial and industrial control systems; specialty chemicals and plastics; and engineered materials.

The company announced a $1.9 billion acquisition of CAES Systems Holdings LLC (CAES) from private equity firm Advent International on June 28 to enhance its defense technologies in space, air, land and sea. CAES’ high-reliability radio frequency technologies have the potential to help Honeywell drive long-term growth and further diversify revenue streams in the defense industry.

Courtesy of www.StockRover.com. Learn about Stock Rover by clicking here.

Honeywell is a current profitable recommendation in the Flying Five portfolio of the Forecasts & Strategies investment newsletter led by Mark Skousen, PhD, an economist who serves as a Presidential Fellow at Chapman University. The Flying Five stocks are Skousen’s choice among the five high-dividend-paying Dow stocks with the lowest prices. He has been recommending a Flying Five each year since the early 1990s, and those stocks typically outperform the market.

Ben Franklin scion Mark Skousen, head of Forecasts & Strategies, talks to Paul Dykewicz.

Honeywell has a long tradition as a space company that includes serving NASA with the Appolo moon landing missions. In fact, roughly 1,000 satellites, or 80% of those currently in orbit, have Honeywell components on board, according to the company.

Citigroup rates Honeywell as a “buy” due to a solid long-term earnings per share (EPS) growth potential despite an uncertain macro environment. Short-cycle weakness should ease over time and longer-cycle end markets, particularly aerospace, could stay resilient and let the company remain well positioned in secular growth market such as automation and digitalization, Citigroup wrote in a recent research note.

Plus, recent structural cost actions could drive better-than-expected operating leverage in a growth environment, Citigroup continued. Finally, accelerated cash deployment and an under-levered balance sheet with good cash flow could spur further upside over time, Citigroup concluded.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Space Stocks to Buy: Booz Allen Hamilton

Booz Allen Hamilton (NYSE: BAH), a McLean, Virginia-based recommendation from the Chicago-based investment firm William Blair, has advanced after reporting fourth-quarter revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) above consensus analysts’ estimates during late May. The dividend-paying defense stock’s management issued its fiscal 2025 guidance above consensus on the strength of its pipeline of opportunities and hiring trends offset by potential election and geopolitical disruptions.

Booz Allen’s artificial intelligence (AI) and machine learning (ML) Databricks partnership for the Advana platform has been a major growth driver, wrote Louie DiPalma, a William Blair aerospace and defense analyst. The industry continues to benefit from a strong 2023 defense budget, a favorable hiring environment and wage inflation, he added.

“Headcount trends and strong bookings will likely continue to be the main drivers of revenue growth, and both are in the firm’s favor,” DiPalma continued. “Over the past few years, Booz Allen has won elite contracts for cybersecurity (Thunderdome, CDM DEFEND, CyPrESS), data analytics (Advana, CDC DMA), artificial intelligence (EMAPS, the JAIC, Space Force remote sensing), and augmented reality (Army digital soldier, soldier as a service). We view the stock as artificial intelligence at a reasonable price (AARP) and see upside of greater than 15% over the next year.”

Chart courtesy of www.stockcharts.com

Booz Allen Hamilton Has Additional Backers

Another fan of Booz Allen Hamilton is Jim Woods, a former Army paratrooper who has recommended the company profitably in the past. Woods has a big defense contractor in the Income Multipliers portfolio of his Successful Investing newsletter but he also likes Booz Allen Hamilton.

Jim Woods leads Successful Investing and co-heads Fast Money Alert.

As a former military man, Woods has a keen interest in defense and cyberspace, following them closely for subscribers of his Successful Investing newsletter and his trading services such as Bullseye Stock Trader, High Velocity Options and Fast Money Alert. The latter service he co-heads with Mark Skousen, PhD, who also leads the Forecasts & Strategies investment newsletter.

Booz Is a Bullseye for Woods 

Subscribers of Bullseye Stock Trader collected a profit of 21.67% in 2019 when Woods recommended the stock for slightly more than three months. He also recommended related call options in Bullseye Stock Trader that produced a profit of 166.67%.

Fast Money Alert subscribers gained 9.59% after only about a month late in 2022 with a follow-up recommendation of Booz Allen Hamilton. A related call option recommendation in Fast Money Alert for Booz Allen Hamilton produced a 239.27% profit in less than one month.

Bryan Perry, who leads the Cash Machine investment newsletter, generated a 25% gain for his subscribers in the Breakout Options Alert advisory service in less than three weeks last May.

Bryan Perry leads the Breakout Options Alert advisory service.

Connell Counsels to Buy Booz Allen Hamilton

Michelle Connell, owner and president of Dallas-based Portia Capital Management LLC, is yet another fan of Booz Allen Hamilton. Focused on wealth management for private investors and non-profit institutions, Connell advised that the company has “robust fundamentals” and has generated more than a half billion dollars in free cash flow every year for the last 10 years. Its return on equity is well over 50%, she added.

Plus, the company’s revenue growth is in excess of 15% a year. Expect this to increase given the demand for AI-related consulting services, Connell continued.

The stock’s dividend yield of 1.28% likely will increase, given the amount of demand for AI ,as well as its strong free cash flow, she added. Plus, there is no short interest in the stock, adding that means no one is willing to go against BAH and its stock performance, Connell concluded.

Michelle Connell leads Dallas-based Portia Capital Management.

Five Dividend-paying Space Stocks to Buy: Lockheed Martin (NYSE: LMT)

Lockheed Martin (NYSE: LMT), a Bethesda, Maryland-based aerospace and defense company, recently received a 12-month price target of $525 and a buy recommendation from Citigroup. The company is a combination of a 1995 merger between Lockheed Corporation and Martin Marietta Materials, Inc.

In its enlarged form, Lockheed Martin focuses on defense, space, intelligence, homeland security and information technology. The company operates the key business segments such as Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space.

Management recently gave guidance that margins are likely to trough in 2024 and head toward 11%-plus over time, driven largely by product mix, Citigroup wrote in a recent research note. The loss-making classified contract at Lockheed Martin’s MFC business will be a tailwind in 2025, i.e., lower forward loss charges, while the rest of the margin accretive MFC portfolio is likely to grow faster than the remainder of the company. Further, new awards across the company face the current cost environment and should produce margins higher than pre-pandemic backlog, according to the Citigroup research note.

Lockheed Martin recently announced it awarded privately held Firefly Aerospace a contract for 15 launches, including options for 10 additional ones in the future. Firefly’s Alpha rocket is in a unique position with 1,000 KG of payload capacity, offering much more than Rocket Lab (NASDAQ: RKLB). Industry launch giant SpaceX has much more capacity, leaving a niche for Firefly to meet the needs of big defense contractors like Lockheed Martin for certain missions, Citigroup’s aerospace analyst Gursky wrote.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Space Stocks to Buy: SAIC

Reston, Virginia-based Science Applications International Corp. (NASDAQ: SAIC) provides defense, space, civilian and intelligence markets services to the U.S. government to produce $7.2 billion in annual revenues. The government contracts give SAIC a stable, recurring revenue base, significant margin expansion opportunities and a strong cash flow.

SAIC also has a history of creating shareholder value through dividend payouts, share repurchases and acquisitions. The company furhter is carving out a role in artificial intelligence by recently launching Tenjin GPT, a new internal, generative artificial intelligence (AI) resource. The capability is aimed at harnessing cutting-edge AI capabilities to automate and optimize business processes.

Tenjin GPT is an example of using technological innovation to provide real-time insights and data analysis, enhancing creativity and collaboration. In addition, Tenjin GPT is the latest feature of SAIC’s data science platform, leveraging the power of OpenAI’s GPT to give users access to the latest advancement in natural language processing.

The state-of-the-art AI model enables users to develop sophisticated applications, to automate repetitive tasks, to streamline processes and to gain insights from data. Powered by Microsoft’s Azure AI, the framework is intended to ensure seamless integration and scalability.

SAIC offers solutions in mission intellectual technology (IT), enterprise IT, engineering services and professional services. The company aims to integrate emerging technology into mission critical operations to modernize and enable critical national imperatives.

Also in May, the company won a $232 million contract to develop intelligence and electronic warfare systems for the U.S. Army. The contract is part of the Department of Defense Information Analysis Center’s (DoD IAC) multiple-award contract (MAC) vehicle. These DoD IAC MAC task orders (TOs) are awarded by the U.S. Air Force’s 774th Enterprise Sourcing Squadron to develop and create new knowledge to enhance the DTIC repository and the research and development (R&D) and science and technology (S&T) community.

Bargain-hunting investors may find now is a good time to invest in SAIC. The stock dropped recently but appears to be trending up again, as shown by the chart below.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Space Stocks to Buy: General Dynamics

General Dynamics (NYSE: GD), headquartered in Falls Church, Virginia, provides land combat vehicles, weapons systems and munitions, ship construction and repair, and technology products and services. In addition, General Dynamics is a leader in the business aviation industry through its Gulfstream and Jet Aviation subsidiaries. Overall, General Dynamics operates in four main segments: Combat Systems, Aerospace, Marine Systems and Technologies.

The company notched an overall operating margin of 11.0%, with margins of 15% in Aerospace, 14.4% from Combat Systems, 9.5% with Technologies and 7.6% by Marine Systems. Citigroup rates shares of General Dynamics as a “Buy.”

The investment bank recommends building positions in the company due to:

1) An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years;

2) Marine segment growth prospects and improved margins as the company’s labor force and supply chain normalize post-pandemic;

3) Rising demand for the Combat Systems segment as the United States and its NATO allies prepare plans for increased military spending to deter further land-based conflicts in Europe; and

4) Increasing valuation for defense prime contractors.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Space Stocks to Buy as Geopolitical Risk Mounts

An enhanced alliance between Russia and North Korea is adding additional risk to the ongoing wars in the world. Experts speculate China’s leaders likely are worried about a potential loss of influence over North Korea after its leader Kim Jong Un and Russian President Vladimir Putin signed a pact this week, according to the Associated Press.

The alliance not only will give Russia additional access to arms and military equipment as it continues its invasion of Ukraine, but it could increase instability on the Korean Peninsula. China’s leaders now face what could be the strongest Russia-North Korea partnership since the Cold War.

The increased drama comes as the Middle Eastern conflict in Gaza between Israel and Hama shows no end in sight, while Russia keeps trying to gain further ground in Ukraine. To aid in Ukraine’s defense against Russia’s unrelenting attack, Western governments have been supplying additional arms and equipment, as well as allowing some of it to be used against military targets that previously had been declared off-limits.

The five dividend-paying space stocks to buy as launches multiply are benefitting from strong demand to put both commercial and military spacecraft in orbit. Investors who aim for share price appreciation and income increasingly have been able to find it from space stocks that provide launch services and support satellite communications services.

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 for Graduation Season! 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.

“What is a REIT?” a curious investor might ask.

REITs, or otherwise known as Real Estate Investment Trusts, are a great way to diversify and add growth to an investment portfolio. Investing in REITs is also an easy way for investors to gain exposure to the real estate market.

A REIT is a company that owns, operates, or finances real estate that produces income. There are a wide range of property types that REITs invest in, including apartment buildings, warehouses, offices, retail centers, medical facilities, data centers, hotels, cell towers and farmland. Typically, REITs focus on an individual property type, but some REITs do have portfolios that consist of a variety of property types. 

What is a REIT? Well-Known Ones Include…

Well-known REITs include Apple Hospitality REIT (NYSE: APLE), Armour Residential REIT (NYSE: ARR) and Brookfield Property REIT (NASDAQ: BPYU).

How Do REITs Work?

Generally, REITs follow a simple business model: the company buys or develops properties and then leases them out to collect rent as its primary source of income. The income generated by the company is paid out to shareholders in the form of dividends. REITs are required to pay at least 90% of the company’s taxable income to shareholders, and the shareholders pay the income taxes on those dividends.

However, some REITs do not own any property, choosing the alternate route of financing real estate transactions. These REITs generate income from the interest on the financing. Mortgage REITs are an example of REITs that do not actually own properties. Mortgage REITs will be discussed in further detail below.

What is a REIT? Types of REITs

REITs can be classified into four categories. The categories are: equity, mortgage, public non-traded and private.

1. Equity REITs: The majority of REITs are equity REITs. Equity REITs own or operate income-producing real estate, and they are publicly traded on major stock exchanges. Equity REITs are often simply referred to as REITs.
2. Mortgage REITs: Also known as mREITs, mortgage REITs provide financing for real estate by buying or originating mortgages and mortgage-backed securities. mREITs earn income from the interest on the investments.
3. Public Non-Traded REITs: Public, non-traded REITs are registered with the Securities and Exchange Commission (SEC) but do not trade on national stock exchanges.
4. Private REITs: Private REITs are exempt from SEC registration and the shares do not trade on national stock exchanges.

How to Invest in a REIT

If a REIT is listed on a major stock exchange, investors can easily buy shares the same way any other public stock is purchased. 

Investors can also invest in REITs through a REIT mutual fund or a REIT ETF (exchange traded fund). 

Private REITs and Public non-traded REITs can also be purchased, however it is more complicated. Those investments are generally limited to individuals and institutions who meet certain financial criteria.

REIT Pros and Cons 

As with any other investment, it is important to consider the advantages and disadvantages of adding REITs to a portfolio. REITs definitely offer lucrative upsides, but investors should also be aware of the drawbacks associated with them.

What is a REIT? Pros and Cons 

Pros: 

• REITs provide diversification within an investment portfolio 
• Exposure to real estate market, which can be lucrative depending on economic conditions
• REIT shareholders earn high dividends

Cons: 

• REITS can be volatile since they are subject to market risk 
• Potentially high taxes associated with REITs
• Possibility of steep management and transaction fees

What Makes a Company Distinguishable as a REIT?

In order to be classified as a REIT, a company must meet the following criteria: 

• Invest at least 75% of total assets in real estate.
• Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property or from real estate sales.
• Have a minimum of 100 shareholders.
• Be an entity that is taxable as a corporation.
• Be managed by a board of directors or trustees.
• Have no more than 50% of its shares held by five or fewer individuals.
• Pay at least 90% of taxable income as shareholder dividends each year

What is a REIT? The Bottom Line 

REITs are a great option for investors who are looking to add real estate to their portfolio. REITs offer multiple advantages, and can be incredibly profitable depending on the market conditions. However, it is important for investors to be well informed about everything that REITs entail before deciding to invest.

 

Want more? Read our related articles:

The Ultimate Guide to Investing in REITs

How Risky are REITs? 

The 13 Types of REIT Stocks and How to Invest in Them 

Investing in REITs: Pros and Cons 

Why Do REITs Have High Dividend Payout Ratios?

Five dividend-paying defense contractor investments to purchase provide powerful ways to profit from wars raging in the world.

The five dividend-paying defense contractor investments to purchase feature four funds and a compelling company based in the Washington, D.C., area that equity research analysts of Chicago-based investment firm William Blair recently visited. All five dividend-paying defense contractor investments are worth considering seriously, market experts opined.

Demand is rising and staying strong for everything from submarines and space launch vehicles in defense to business jets in commercial aerospace, according to BofA Global Research. However, supply chain and capacity currently cause constraints.

Even though supply chain and labor have improved, BofA wrote in a recent research note that many defense companies still incur these issues as pain points.

Courtesy of www.StockRover.com. Learn about Stock Rover by clicking here.

Retired Pension Fund Chairman Praises Dividend-paying Defense Funds

Investors may want to consider dividend-paying exchange-traded funds (ETFs) focused on defense, said Bob Carlson, a former pension fund chairman who heads the Retirement Watch investment newsletter. Many of the investments Carlson recommends in his Retirement Watch newsletter feature ETFs.

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

Five Dividend-paying Defense Contractor Investments to Purchase: PPA

The ETF with the highest returns over most time periods and that surged ahead of the others in the last year or so is Invesco Aerospace & Defense (PPA), which tracks the SPADE Defense Index, said Bob Carlson, who updates his recommendations each month in his Retirement Watch investment newsletter. The ETF pays a dividend yield of 0.60%. Many of the investments Carlson recommends in his Retirement Watch newsletter feature ETFs that he watches closely to update his favorites each month.

Roughly 89.2% of the fund is invested in the industrials sector, with technology accounting for 10.7%. The stocks in the fund tend to sell at lower valuations than the broad market indexes and pay higher dividends, Carlson said.

PPA recently owned 51 stocks, and 53% of the fund was in its 10 largest positions.

The top five positions were RTX (NYSE: RTX), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), GE Aerospace (NYSE: GE) and General Dynamics (NYSE: GD). Each of the first four holdings composes more than 5% of the fund, while GD accounts for 4.93%.

PPA dipped 1.10% in the last month, rose 4.43% in the past three months, 11.84% for the year to date and 25.25% during the last 12 months. Its 10-year average annualized return is 13.21%.

Chart courtesy of www.stockcharts.com

The fund seeks to track the investment results, before fees and expenses, of the SPADE Defense Index. Generally, the fund invests at least 90% of its total assets in securities that comprise the underlying index. That index consists of common stocks of companies that are important to the defense sector and are involved with the development, manufacture, operation and support of U.S. defense, military, national/homeland security and government space operations.

Five Dividend-paying Defense Contractor Investments to Purchase: XAR

Carlson also praised dividend-paying SPDR S&P Aerospace and Defense (XAR), an ETF designed to track the S&P Aerospace & Defense Select Industry Index. XAR recently had 32 equity holdings with 44% of the fund in the 10 largest positions, while paying a dividend yield of 0.54%.

The five largest XAR holdings, all greater than 4% of the fund, and their respective share of the fund’s holdings, are: AeroVironment Inc. (NASDAQ: AVAV), 4.90%; Woodward Inc. (NASDAQ: WWD), 4.71%; Howmet Aerospace Inc. (NYSE: HWM), 4.61%; HEICO Corp. (NYSE: HEI), 4.53%; and RTX Corp. (NYSE: RTX), 4.40%.

The dividend-paying fund has been relatively flat in the past month, dipping 0.64%, while rising 1.59% in the last three months, 4.3% year to date, 17.93% for the past year and an average 11.77% annually for the past 10 years.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Defense Contractor Investments to Purchase: GCAD

The third of five dividend-paying defense contractor investments to purchase is Gabelli Commercial Aerospace & Defense (GCAD). The ETF has been open only since early 2023, so its track record is still developing.

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 defense, aerospace and aviation.

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

The five biggest holdings at last check were Moog (NYSE: MOG:A), Boeing (NYSE: BA), Spirit Aerosystems Holdings (NYSE: SPR), Ducommun (NYSE: DCO) and Curtiss-Wright (NYSE: CW). The fund’s dividend yield is 0.9%.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Defense Contractor Investments to Purchase: ITA

Carlson counseled that the lowest fees among the four defense funds are charged by iShares US Aerospace & Defense (ITA), which seeks to track the Dow Jones U.S. Select Aerospace and Defense Index. ITA is 100% invested in the industrials sector.

The fund recently owned 38 securities, and its 10 largest positions were 77% of the portfolio.

Top positions in the fund recently were RTX (NYSE: RTX), Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), Howmet Aerospace Inc. (NYSE: HWM) and TransDigm Group (NYSE: TDG).

ITA is up 4.55% over the last four weeks, 8.60% over three months, and 22.35% over the last 12 months. Its 10-year average annual return is 10.67%. The dividend yield is 0.89%.

Chart courtesy of www.stockcharts.com

Five Dividend-paying Defense Contractor Investments to Purchase: BAH

Booz Allen Hamilton (NYSE: BAH), a McLean, Virginia-based recommendation from the Chicago-based investment firm William Blair, traded up after reporting fourth-quarter revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) above consensus analysts’ estimates during late May. The dividend-paying defense stock’s management issued its fiscal 2025 guidance above consensus on the strength of its pipeline of opportunities and hiring trends offset by potential election and geopolitical disruptions.

Booz Allen’s artificial intelligence (AI) and machine learning (ML) Databricks partnership for the Advana platform has been a major growth driver, DiPalma wrote in a recent research note. The industry continues to benefit from a strong 2023 defense budget, a favorable hiring environment and wage inflation, he added.

“Headcount trends and strong bookings will likely continue to be the main drivers of revenue growth, and both are in the firm’s favor,” DiPalma wrote. “Over the past few years, Booz Allen has won elite contracts for cybersecurity (Thunderdome, CDM DEFEND, CyPrESS), data analytics (Advana, CDC DMA), artificial intelligence (EMAPS, the JAIC, Space Force remote sensing), and augmented reality (Army digital soldier, soldier as a service). We view the stock as artificial intelligence at a reasonable price (AARP) and see upside of greater than 15% over the next year.”

Chart courtesy of www.stockcharts.com

Booz Allen Hamilton Has Other Fans, Too

Another fan of Booz Allen Hamilton is Jim Woods, a former Army paratrooper who has recommended the company profitably in the past. Woods has a big defense contractor in the Income Multipliers portfolio of his Successful Investing newsletter but he also likes Booz Allen Hamilton.

Jim Woods leads Successful Investing and co-heads Fast Money Alert.

As a former military man, Woods has a keen interest in defense and cyberspace, following them closely for subscribers of his Successful Investing newsletter and his trading services such as Bullseye Stock Trader, High Velocity Options and Fast Money Alert. The latter service he co-heads with Mark Skousen, PhD, an economist who is a Presidential Fellow at Chapman University, as well as the head of the Forecasts & Strategies investment newsletter.

Ben Franklin scion Mark Skousen, head of Forecasts & Strategies, talks to Paul Dykewicz.

Five Dividend-paying Defense Contractor Investments to Purchase Shine

Subscribers of Bullseye Stock Trader collected a profit of 21.67% in 2019 when Woods recommended the stock for slightly more than three months. He also recommended related call options in Bullseye Stock Trader that produced a profit of 166.67%.

Fast Money Alert subscribers gained 9.59% after only about a month late in 2022 with a follow-up recommendation of Booz Allen Hamilton. A related call option recommendation in Fast Money Alert for Booz Allen Hamilton produced a 239.27% profit in less than one month.

Bryan Perry, who leads the Cash Machine investment newsletter, generated a 25% gain for his subscribers in the Breakout Options Alert advisory service in less than three weeks last May.

Bryan Perry leads the Breakout Options Alert advisory service.

Michelle Connell, owner and president of Dallas-based Portia Capital Management LLC, also favors Booz Allen Hamilton. Focused on wealth management for private investors and non-profit institutions, Connell advised that the company has “robust fundamentals” and has generated more than a half billion dollars in free cash flow every year for the last 10 years. Its return on equity is well over 50%, she added.

Plus, the company’s revenue growth is in excess of 15% a year. Expect this to increase given the demand for AI-related consulting services, Connell continued.

The stock’s dividend yield of 1.28% likely will increase, given the amount of demand for AI ,as well as its strong free cash flow, she added. Plus, there is no short interest in the stock, adding that means no one is willing to go against BAH and its stock performance, Connell concluded.

Michelle Connell leads Dallas-based Portia Capital Management.

Five Dividend-paying Defense Contractor Investments to Purchase Amid Wars

An enhanced alliance between Russia and North Korea is adding additional risk to the ongoing wars in the world. Experts speculate China’s leaders likely are worried about a potential loss of influence over North Korea after its leader Kim Jong Un and Russian President Vladimir Putin signed a pact this week, according to the Associated Press.

The alliance not only will give Russia additional access to arms and military equipment as it continues its invasion of Ukraine, but it could increase instability on the Korean Peninsula. China’s leaders now face what could be the strongest Russia-North Korea partnership since the Cold War.

The increased drama comes as the Middle Eastern conflict in Gaza between Israel and Hama shows no end in sight, while Russia keeps trying to gain further ground in Ukraine. To aid in Ukraine’s defense against Russia’s unrelenting attack, Western governments have been supplying additional arms and equipment, as well as allowing some of it to be used against military targets that previously had been declared off-limits.

The five dividend-paying defense contractor investments to purchase are on the rise as demand for military equipment climbs. Investors who want investments poised to advance can purchase them and try to protect freedom at the same time.

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 for Graduation Season! 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.

Seven aerospace-defense investments to purchase for income and growth feature two funds and five flight-worthy stocks.

The seven aerospace-defense investments to purchase for income have received recommendations from seasoned stock market forecasters who praise their prospects for ascending further. With war raging, demand is growing for companies supplying the U.S. military and its allies with weapons and equipment to defend freedom.

The seven aerospace-defense investments to purchase for income amid escalating conflicts and combat continue to have tailwinds carrying them forward. Current catalysts include increased military spending by the U.S. Department of Defense and countries in the North Atlantic Treaty Organization (NATO).

The commercial aerospace recovery is seen as strong enough to cut through economic uncertainty, according to BofA Global Research. Defense spending is necessary due to mounting geopolitical security risks, BofA added.

Courtesy of www.StockRover.com. Learn about Stock Rover by clicking here.

Seven Aerospace-Defense Investments to Purchase for Income: PPA

The ETF with the highest returns over most time periods and that surged ahead of the others in the last year or so is Invesco Aerospace & Defense (PPA), which tracks the SPADE Defense Index, said Bob Carlson, a former pension fund chairman who heads the monthly Retirement Watch investment newsletter. The ETF pays a dividend yield of 0.60%. Many of the investments Carlson recommends in his Retirement Watch newsletter feature ETFs that he watches closely to update his favorites each month.

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

Roughly 89.2% of the fund is invested in the industrials sector, with technology accounting for 10.7%. The stocks in the fund tend to sell at lower valuations than the broad market indexes and pay higher dividends, Carlson said.

PPA recently owned 51 stocks, and 53% of the fund was in its 10 largest positions.

The top five positions were RTX (NYSE: RTX), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), GE Aerospace (NYSE: GE) and General Dynamics (NYSE: GD). Each of the first four holdings composes more than 5% of the fund, while GD accounts for 4.93%.

PPA dipped 1.10% in the last month, rose 4.43% in the past three months, 11.84% for the year to date and 25.25% during the last 12 months. Its 10-year average annualized return is 13.21%.

Chart courtesy of www.stockcharts.com

The fund seeks to track the investment results, before fees and expenses, of the SPADE Defense Index. Generally, the fund invests at least 90% of its total assets in securities that comprise the underlying index. That index consists of common stocks of companies that are important to the defense sector and are involved with the development, manufacture, operation and support of U.S. defense, military, national/homeland security and government space operations.

Seven Aerospace-Defense Investments to Purchase for Income: XAR

Carlson also praised the dividend-paying SPDR S&P Aerospace and Defense (XAR), an ETF designed to track the S&P Aerospace & Defense Select Industry Index. XAR recently had 32 equity holdings with 44% of the fund in the 10 largest positions, while paying a dividend yield of 0.54%.

The five largest XAR holdings, all greater than 4% of the fund, and their respective share of the fund’s holdings, are: AeroVironment Inc. (NASDAQ: AVAV), 4.90%; Woodward Inc. (NASDAQ: WWD), 4.71%; Howmet Aerospace Inc. (NYSE: HWM), 4.61%; HEICO Corp. (NYSE: HEI), 4.53%; and RTX Corp. (NYSE: RTX), 4.40%.

The dividend-paying fund has been fairly flat the past month, dipping 0.64%, while rising 1.59% in the last three months, 4.3% year to date, 17.93% for the past year and an average 11.77% annually for the past 10 years.

Chart courtesy of www.stockcharts.com

Seven Aerospace-Defense Investments to Purchase for Income: Bombardier 

Montreal-based Bombardier (XTSE: BBD.B) has navigated its way through a turbulent turnaround, according to a recent research report by BofA Global Research defense and aerospace analyst Ron Epstein. He upgraded Bombardier to “buy” from “underperform.”

The rating is even more impressive since BofA likened the challenge of Bombardier surmounting adverse conditions as an aircraft and aerospace parts manufacturer to “climbing Mt. Everest.” After reaching the peak of post-COVID BizJet demand, the company’s aviation business is overtaking pre-COVID 2019 levels.

That performance lends support to the company’s near-term strategy, Epstein wrote in his research note. With Bombardier now focused on harvesting its installed base, growing its aftermarket business and remaining disciplined on capital deployment, BofA is forecasting opportunities for potential upside. Bombardier’s strategy seems to be working so well that Epstein more than doubled his price target on the stock to C$120 from C$52.

Chart courtesy of www.stockcharts.com

Seven Aerospace-Defense Investments to Purchase for Income: Ascending

Even though Bombardier took a conservative approach and reiterated its 2025 financial outlook, Epstein wrote that it signaled the outlook is pragmatic and its management is more measured and thoughtful with its forecasting compared to prior history. Additionally, BofA viewed the targets as more attainable given the increased focus on aftermarket and growing installed fleet to support growth in the segment.

Bombardier also maintained its position that there is no need for a so-called clean sheet design of a new aircraft anytime soon. Instead, to the benefit of free cash flow (FCF) and returning capital to shareholders, improvements on the existing fleet and derivatives take precedent, BofA wrote.

“While there won’t be any new aircraft for now, the Global8000 continues through its certification process and is expected to enter into service in 2025,” Epstein wrote. Bombardier’s leadership counseled that if there were a new compelling technology, then it would be time for a clean-sheet design, he added.

“The area where we do see the most risk is BBD’s aspirations for acquisitions,” Epstein wrote. “BBD named acquisitions to support growth in both its aftermarket and defense segments as a key priority. While M&A is not inherently a negative, others in our coverage, with far more M&A activity, have noted assets coming to market are being priced at rich premiums. We see the most risk for BBD to overpay to increase their aftermarket exposure or take on debt at higher rates to the detriment of EPS and returning cash.”

Seven Aerospace-Defense Investments to Purchase for Income: Honeywell

The idiom, “one man’s loss is another man’s gain,” captures what has been occurring in the aerospace-defense industry. Production problems and cash concerns at Boeing Inc. (NYSE: BA) appear likely to drive reduced growth in original operating equipment (OEM), such as new aircraft, while boosting the demand for aftermarket parts and equipment.

The management of Charlotte, North Carolina-based Honeywell International Inc. (NASDAQ: HON) recently met with analysts at BofA Global Research and indicated expectations that aftermarket sales would climb if OEM slowed. This is consistent with the message from other aerospace suppliers, BofA wrote.

Honeywell leaders suggested that the Federal Aviation Administration (FAA) will require Boeing to build inventory buffer in its supply chain, aiding OEM growth amid slowing production. A diversified, global technology and manufacturing company, Honeywell’s operations consist of four business groups: Aerospace Technologies, Industrial Automation, Building Automation and Energy & Sustainability Solutions.

The company is a “premier supplier” of avionics, power and control systems for the aerospace industry, BofA Global Research wrote in a research note. Honeywell has executed well in a volatile macro environment, causing BofA to express optimism about recent initiatives that include increased spending on research and development (R&D), as well as internal automation investment that could become a structural shift to reinvest in the business.

In addition, Honeywell has strong pricing power to offset rising costs. Based on such strengths, BofA has given Honeywell a “buy” rating and a price objective of $250, with a multiple of 16x 2025 estimated EV/EBITDA. The target multiple set by BofA is in line with peers trading at 16x on 2024 estimates. The investment firm wrote that the in-line valuation is warranted as top-quartile execution is offset by near-term end market headwinds.

Chart courtesy of www.stockcharts.com

Mark Skousen, PhD, who is rated one of the top 20 most influential living economists by SuperScholar.org, also writes the monthly Forecasts & Strategies investment newsletter and the TNT Trader advisory service that he runs with his son Todd Skousen to provide both stock and option recommendations. Mark Skousen, a President Fellow at Chapman University, recommends Honeywell as a profitable holding in his Forecasts & Strategies investment newsletter. He wrote in the June issue of Forecasts & Strategies that Honeywell is a conservative choice for investors seeking both income and growth.

Ben Franklin scion Mark Skousen, who heads Forecasts & Strategies, talks to Paul Dykewicz.

Seven Aerospace-Defense Investments to Purchase for Income: Howmet

Howmet Aerospace (NYSE: HWM), an advanced engineering company in Pittsburgh, received a buy recommendation and a $45 a share price target from BoA Global Research. Howmet provides some critical components in the F-35 joint strike fighter that hits Mach 1.6 under the thrust of possibly the most advanced engine on earth. The joint strike fighter is built with cutting-edge materials, integrated airframe design and next-generation avionics to enable this fifth-generation fighter jet to operate with unprecedented stealth, speed and agility in air-to-air and air-to-ground combat, company officials said.

In developing this complex fighter jet, Lockheed Martin (NYSE: LMT) turned to Howmet to provide key parts that include single-piece, forged aluminum bulkheads that form the “backbone” of the aircraft structure and save 300 to 400 pounds per jet, while cutting costs by 20%. The fighter jet also has titanium bulkheads and uses titanium to manufacture other airframe structures for all three F-35 JSF variants. Howmet further supplies single-crystal, nickel-based superalloy blades and vanes that operate in environments hotter than the melting point of the metal to propel the engine.

Joint Strike Fighter Is a Multirole Combat Jet Capable of Flying at Mach 1.6.

To hold together the design, Howmet’s vibration-resistant fasteners are engineered to endure extreme G-forces and performance requirements. From nose to tail, Howmet Aerospace helps its customers meet aggressive weight, range and fuel efficiency targets to enable the F-35 to do what other military aircraft cannot, according to Howmet statement.

Not only is Howmet another “buy” recommendation of  BofA Global Research, it also is a favorite defense investment of Michelle Connell, owner and president of Dallas-based Portia Capital Management LLC. Focused on wealth management for private investors and non-profit institutions, Connell advised that Howmet has strong financial fundamentals, including gross margins of 28% and returns of equity above 20%. For the last quarter, and despite weakness in demand by Boeing for its 737 MAX, the company was able to meet its revenue and profit estimates, she added.

Plus, demand is strong enough for Howmet to keep the remainder of its 2024 estimates in place, Connell said. The company beat free cash flow estimates of $400 million last quarter and its rising cash flow is expected to be a long-term trend, she continued.

Michelle Connell leads Dallas-based Portia Capital Management.

“Due to the continued build-out of air fleets, defense and commercial, HWM has had great performance,” Connell said.

For income investors, Connell pointed out that Howmet is increasing its dividend, albeit a small one, by 40% this year.

“Like its larger peers, analysts anticipate HWM to become a strong dividend payer over the next few years,” Connell said.

Seven Aerospace-Defense Investments to Purchase for Income: Heico

Hollywood, Florida-based Heico Corporation (NYSE: HEI), rated as “outperform by the William Blair investment firm in Chicago, announced in January 2024 that its Sunshine Avionics subsidiary entered an exclusive perpetual license and acquired key assets from Honeywell to produce, sell and repair Boeing 737NG and Boeing 777 Cockpit Displays and Legacy Displays. Financial terms for the transaction were not disclosed, but Heico leaders said the purchase would be accretive to earnings in the year after the transaction’s closing.

In October 2023, VSE Corporation (NASDAQ: VSEC) established a similar licensing agreement with Honeywell for fuel control systems, with VSE paying $105 million for that transaction. The deals show Honeywell’s willingness to divest aerospace assets and licenses to others like Heico and VSE.

In addition, Heico is integrating Wencor into its business, wrote Louie DiPalma, an aerospace and defense analyst with Chicago-based investment firm William Blair. Heico paid $2.1 billion for Wencor.

However, Heico’s management previously had expressed an interest in reducing its debt and not focusing on acquisitions within its Flight Support Group, DiPalma wrote in a research note.

“In our view, the biggest risk to Heico shares is another COVID-like pandemic reducing demand for air travel,”  DiPalma continued.

Chart courtesy of www.stockcharts.com

Heico also is a buy recommendation of BofA Global Research and others, so it is not without a base of analysts who approve of its strategic business moves.

Seven Aerospace-Defense Investments to Purchase for Income: General Dynamics

General Dynamics (NYSE: GD), headquartered in Falls Church, Virginia, provides land combat vehicles, weapons systems and munitions, ship construction and repair, and technology products and services. In addition, General Dynamics is a leader in the business aviation industry through its Gulfstream and Jet Aviation subsidiaries. Overall, General Dynamics operates in four main segments: Combat Systems, Aerospace, Marine Systems and Technologies.

The company notched an overall operating margin of 11.0%, with margins of 15% in Aerospace, 14.4% from Combat Systems, 9.5% with Technologies and 7.6% by Marine Systems. Citigroup rates shares of General Dynamics as a “Buy.”

The investment bank recommends building positions in the company due to:

1) An Aerospace segment growth outlook lifted by recent order trends and a backlog that gives earnings upside for the next several years;

2) Marine segment growth prospects and improved margins as the company’s labor force and supply chain normalize post-pandemic;

3) Rising demand for the Combat Systems segment as the United States and its NATO allies prepare plans for increased military spending to deter further land-based conflicts in Europe; and

4) Increasing valuation for defense prime contractors.

Chart courtesy of www.stockcharts.com

Seven Aerospace-Defense Investments to Purchase for Income: Citigroup’s View

Citigroup recently boosted its 12-month price target for GD to $320, up from $300, based on a 19x price/earnings (P/E) multiple on its estimates a year from now. However, there are risks that include the business jet industry’s vulnerability to unpredictable shocks that cannot be incorporated into earnings models, such as terrorism and epidemics (COVID/SARS).

“Furthermore, the industry has historically been correlated to economic growth,” wrote Citigroup defense and aerospace analyst Jason Gursky. “The company’s other exposure is the defense market, which is subject to changes in political will, global threats to the U.S. and its allies, the state of the federal budget and the condition of existing U.S. and allied military equipment. General Dynamics shares may materially underperform our price target should the economy enter a prolonged recession that results in decreased business jet orders and flight hours. Shares would also likely underperform to the extent that global peace broke out and DoD budgets were severely cut.”

DiPalma, of William Blair, also likes General Dynamics as an investment. He currently has an “outperform” rating on the stock.

A third fan of the stock is Jim Woods, a former Army paratrooper who recommends it in the Income Multipliers portfolio for his Successful Investing newsletter subscribers. As a former military man, Woods has a keen interest in defense issues and follows them closely for his Successful Investing subscribers.

Jim Woods leads Successful Investing and co-heads Fast Money Alert.

Russia’s Putin Calls for Ukraine to Abandon Territory as War Rages

Russia’s President Vladimir Putin called on Friday, June 14, for Ukraine to agree to give up control of its territories he claims to have annexed, withdraw from those lands and commit not join NATO. Ukraine’s President Volodymyr Zelensky responded the same day that the Russian dictator would not stop the current offensive, even if his demands were met.

U.S. Secretary of Defense Lloyd Austin pointed out that Putin is illegally occupying Ukraine’s sovereign territory and lacks the right to dictate to Ukraine what it should do achieve peace. Austin, speaking in Brussels, Belgium, at a meeting of defense ministers of NATO member countries, added that Putin could end the war today by leaving Ukraine’s sovereign territory.

Hamas Rejects U.S. Ceasefire Proposal Approved by UN Security Council

Hamas leaders reportedly rejected to a ceasefire proposal on Tuesday, June 11, offered by U.S. President Biden and approved by the United Nations Security Council. Israeli officials said the reply was “tantamount” to an outright rejection of the terms.

Hamas “changed all of the main and most meaningful parameters,” an Israeli government source said. The militant group leaders also rejected the proposal for a hostage release supported by President Biden, the source added.

The ceasefire proposal would have brought home living hostages taken from Israel and those who died while held by Hamas militants who seized them during its brutal raid on Oct. 7. The plan also called for increased humanitarian aid, as well as an exchange of some Palestinian prisoners held in Israel.

The end goal was a permanent “cessation of hostilities” and a major reconstruction plan for Gaza. The United States recently also recently faced a severe setback when a $300 million pier quickly erected by the U.S. military to disperse desperately needed food, liquids, medicine and other aid to civilians in Gaza broke apart amid rough seas. However, the pier was repaired within just weeks to allow the resumption of much needed aid.

Israel successfully rescued four hostages on Saturday, June 8, held in Gaza by Hamas militants, but the mission also involved the death of Palestinians and one Israeli Defense Forces commander who participated in the rescue operation. Since Hamas leaders and fighters embed themselves among the civilian population in Gaza, the loss of human life during combat has been heavy. Nonetheless, Hamas leaders passed up a chance to end the hostilities by not approving the ceasefire proposal.

Israel leaders are trying to find and destroy an extensive tunnel system in neighboring Gaza that has been used to store weapons, as well as hide the Hamas leaders and militants who were responsible for the Oct. 7 raid in Israel that killed an estimated 1,200 people and took 240 hostages into Gaza. Clashes continue in the city of Rafah in Gaza, where Hamas militants remain in the midst of a large Palestinian civilian population.

The Gaza Ministry of Health estimates that more than 37,000 Hamas fighters and Palestinian civilians have lost their lives since the war began Oct. 7.

The seven dividend-paying aerospace-defense investments to buy are benefitting from strong demand amid ongoing wars. Income investors who also aim for share price appreciation traditionally can gain it from defense stocks as war-related demand soars.

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 for Graduation Season! 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.