The Best Aerospace & Defense Stocks After the Election

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The inauguration of president-elect Trump is just one week away. The results of the election came to a shock to many, including the stock market. Since the election on November 8th, the S&P 500 is up nearly 6%, resulting in a 6% three month and a 18% twelve month gain. At the same time, the Dow Jones continues to flirt with 20,000, yet narrowly misses the monumental number on each trading day. Many investors remain optimistic as we enter into a new presidency, but there is no predicting where the market will go or when the rally will end.

Sectors that have benefited from the election so far have been healthcare, oil, real estate, financial services, and of course, aerospace and defense. in the last twelve months, the PowerShares Aerospace & Defense ETF (NYSE: PPA) is up nearly 25%, which significantly exceeds the 6% S&P’s performance and the 10% gain from the Dow. The stocks below are some of the biggest names in the aerospace defense industry.

Company Three Month Performance
Boeing Company 19%
Lockheed Martin 9%
Honeywell 10%
Raytheon Company 6%
General Dynamics Corporation 18%
Northrop Grumman Corporation 6%
Huntington Ingalls Industries 23%
Curtiss-Wright Corp. 12%

Trump’s proposed plan is to expand defense spending by increasing the size of the military and by purchasing new ships for the Navy and new jets for the Air Force. Immediately after the election results, the majority of the stocks in this industry soared, but some have since declined due to various comments and tweets made by the president-elect. While the consensus for this industry going forward has been mostly positive, many analysts fear that the number of foreign buyers could decline when Trump is president. This could have a significant impact on these company’s bottom line.

Company Current Price Yield 
Boeing Company 158.29 3.59%
Lockheed Martin Corporation 252.62 2.88%
Honeywell 117.63 2.26%
Raytheon Company 145.65 2.00%
General Dynamics Corporation 176.52 1.72%
Northrop Grumman Corporation 229.15 1.57%
Huntington Ingalls Industries 191.07 1.26%
Boeing Co (NYSE: BA) is an aerospace company that specializes in designing and selling airplanes to airlines and to the military. The company is currently the second largest defense contractor in the United States. The stock is up about 19% in the last three months, as it saw a significant increase since the election and has outperformed both the S&P 500 and the aerospace defense industry. At the end of December, Trump commented that he may be more favorable towards Boeing when considering the purchase of new fighter jets (the F-35). However, just weeks prior, the president-elect tweeted that Boeing’s prices were too high.
Boeing has the highest dividend yield in the industry, at approximately 3.59%. The stock has been paying a dividend since 1937 and has a payout ratio of 79.9%. Boeing recently boosted its quarterly dividend by 30% to $1.42 from $1.09. BA ranks 56 on my Top 100 Dividend Stocks list.
Lockheed Martin Corporation (NYSE: LMT) is a global defense company that focuses on security, defense, and technology. The company is the largest defense contractor in the United States. The stock is up about 8% in the last three months. After surging on the initial news of the election result, the stock began to tumble in the beginning of December as Trump made comments that singled out the company. On Wednesday, Trump brought up the fighter plane, the F-35, and discussed its slow production and high costs with Lockheed. This comment alone, brought the share price down 1.6% during that trading day.
Lockheed Martin also offers a great dividend yield for investors, at around 2.88%. The stock has been paying a dividend since 1995 and has a current payout ratio of 59.8%. This past September, Lockheed Martin increased its dividend by 10% to $0.182 quarterly.
Honeywell International Inc. (NYSE: HON) is a manufacturer that focuses on aerospace and consumer products. The company is up nearly 10% in the last three months, which outperforms the market. Honeywell fits into the aerospace defense category, as it produces engines in the aerospace industry. As for the election, though, the company’s performance may be more tied to its manufacturing business in the infrastructure division. Under the new administrations plans, Honeywell may benefit from railroad and power plant construction. The company may see a boost in its security business and energy management, too.
Honeywell offers a dividend yield of about 2.88% and has a payout ratio of 40.3%. The company has been paying dividends for over 100 years, since 1887 (consecutively paying for 20 years). It has been increasing its dividend consecutively since 2010. The company recently increased its dividend payout 12% to $0.665 in October of last year.
Raytheon Company (NYSE: RTN) is a defense contractor that focuses on the manufacturing of weapons and military equipment. Furthermore, the company is the worlds largest producer of missiles. The stock is up about 6% in the last three months, after surging initially after the election, but then falling soon after.  Raytheon has also been picked by analyst to benefit from Trump’s presidency, given its significant footprint in the industry.
Raytheon currently offers a dividend yield of approximately 2% and has a payout ratio of 42.4%. The company has been paying a dividend since 1954 and has been committed to raising its dividend every year since 2005. Most recently, the stock’s dividend increased by 9% to $0.7325 last March.
General Dynamics Corporation (NYSE: GD) is a aerospace company that produces military products including jets, submarines, and other military vehicles and weapons. The company is up nearly 18% in the last three months, which is in-line with its peers and above the overall market. The company is expected to gain from the election results, but there has been some controversy. It has been reported that Trump’s pick for Defense secretary has ties to GD, which may be a conflict of interest.
General Dynamics has a dividend yield of approximately 1.7% and has a payout ratio of 31.1%. The stock has been paying a dividend since 1998 and has been increasing its dividend every year since its inception. In March, the stock increased its dividend 10% to $0.76.
Northrop Grumman Corporation (NYSE: NOC) is a global security company that provides systems to governments, organizations, and consumers. Its products and services mix consists of many components including defense, space, and cyber. The stock is up about 6% in the last three months. It is expected to follow its peers and benefit from the new President’s new defense budget. However, analysts have been especially bullish on Northrop, as it offers several of the products that will be used in the new budget, including the F-35 fighter jet and the B-21 stealth bomber.
Northrop Grumman offers a dividend yield of about 1.57% and has a payout ratio of 30.7%.  The stock has been paying a dividend since 1943 and has been increasing its dividend every year since 2008. It’s most recent dividend increase was last May, when it raised its dividend 13% to $0.90.
Huntington Ingalls Industries Inc (NYSE: HII) is the world’s largest shipbuilding company for the military. In recent years, the company has provided more ships to the U.S. Navy than any other company. The company is up nearly 23% in the last three months, compared to the S&P’s 6% gain in the same period. Under Trump’s plan, it is likely that Huntington Ingalls will share the task of submarines with General Dynamics. If the Navy grows at the same rate, the company will likely be the producer of ships, too.
Huntington Ingalls currently has a dividend yield of about 1.26% and has a dividend payout ratio of 23%. The stock has been increasing its dividend every year since 2013. It raised its dividend most recently in November, when it raised its dividend 20% from $0.50 to $0.60.

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