Defending Your Portfolio With 35 Years Of Dividend Growth

Decades of consecutive dividend growth are a great sign for dividend investors.

It shows the company is committed to not only paying its dividend, but also raising payments during difficult times.

One company just raised its dividend for the 35th consecutive year.

It means the dividend was raised during some pretty tough periods, including the dot-com crash, Great Recession, and COVID-19 pandemic.

Things were pretty rough back then, so I love knowing General Dynamics (ticker: GD) continued to raise its dividend.

General Dynamics is a defense company producing military equipment for the U.S. and its allies.

It’s the 3rd largest defense contractor in the U.S. and brings in over $30 billion per year from the federal government.

Having a stable customer like the U.S. military allows General Dynamics to pay a nice dividend.

General Dynamics’ dividend yield is currently around 1.8%, which doesn’t seem like a lot.

But its dividend growth is outstanding.

Like we said earlier, General Dynamics has raised its dividend for 35 consecutive years.

And over the last decade, General Dynamics has averaged 8% dividend growth each year.

The defense company is doubling its dividend every 9 years!

And General Dynamics just raised its dividend again.

It will now pay $1.59 each quarter, which is 6% higher than its last payment.

But you only have a few days… you need to own stock in General Dynamics by April 9 (Thursday) to get the higher payment. 

Now, before you go running to buy up shares, you need to be aware of something important about dividends from defense companies.

There’s a lot of political pressure to limit what defense contractors can spend their money on.

Last week, a bipartisan bill was introduced in the U.S. Senate to limit spending on share buybacks, executive compensation, and dividends.

Here’s a link to a press release from Senator Warren’s office.

The bill hasn’t passed.

It still needs to go through various subcommittees as well as pass the Senate and House before being signed into law by the President.

The bill might not even pass, and there’s a lot of time for changes to be made.

But one important part of the proposed bill is it gives the Secretary of Defense the ability to grant waivers to different contractors.

And since General Dynamics is such an important part of our national defense, I’d be surprised if it didn’t get one of these waivers.

Despite these risks, General Dynamics is a great dividend stock.

The company has paid down over $2 billion in debt and lowered its debt-to-equity ratio to less than 0.4x

General Dynamics is also a very efficient company.

Its return on assets (ROA) of 7.5% is one of the highest in the defense industry and near an all-time high for General Dynamics.

Defense stocks are popular with dividend investors… which ones do you own?

Michael Jennings

This post originally appeared at Dividend Stocks Research.

Category: Dividend Stocks