Summary
- General Dynamics is a Dividend Aristocrat, having joined the prestigious list in 2017.
- Despite the risks associated with an aerospace and defense company, General Dynamics is positioned well to continue to deliver strong results for its shareholders.
- Adding to the case for an investment in the company is the fact that it appears to be trading at a 3% discount to fair value.
- Between the 2.2% yield, 7-8% earnings growth, and 0.3% valuation multiple expansion, General Dynamics is likely to deliver annual total returns of 9.5-10.5% over the next decade.
As a dividend growth investor, I prefer to invest in excellent companies operating in industries that will likely benefit from a secular trend over the long-term.
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When we consider that General Dynamics is one of the 5 companies that form the defense contractor oligopoly and that there will always be a need for defense spending in our highly conflict prone world, it seems quite apparent that General Dynamics is well positioned to benefit from the unfortunate reality we live in a perilous world.
Between the above average dividend yield (compared to the broader market), solid dividend safety and growth profile, strong fundamentals, and reasonable valuation, I believe readers will arrive at the conclusion General Dynamics offers investors an attractive entry point at the current price. I'll then conclude by offering my total return estimates over the next decade.
