Chris Higgins: The large-cap aerospace and defense names we cover have been consistent dividend-payers over the past decade, and we think this past history will continue over the next several years as the commercial aerospace cycle goes on strong and U.S. defense budgets increase.
Investors hungry for high dividend yields piled into defense stocks from 2010 to 2013. However, increasing share prices across the defense industry pushed yields down, and this trend was particularly pronounced in 2017 and 2018. The recent underperformance for defense names has meant dividend yields look a bit more attractive now, and while we don’t think we’ll return to the days when yields were pushing 4%, we do believe some names offer secure dividends, decent yields, and the potential for some growth.
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Chris Higgins does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.