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From ships and armored vehicles to corporate jets,
General Dynamics(GD - Get Report) is a go-to company when it comes to big-ticket vehicles. The firm is a major defense contractor (operations which contribute more than 70% of revenues) and also owns Gulfstream, a private jet manufacturer.
On Wednesday, GD announced an 8.51% dividend increase, bringing the firm's payout to 51 cents per share. That's a 2.83% yield at current price levels; General Dynamics is one of the
top-yielding aerospace and defense stocks.
There have been a few black clouds lingering over General Dynamics over the past few years. For starters, the global recession sapped away demand for Gulfstream's high-priced jets, an area where recovery has still been somewhat tentative. At the same time, concerns over possible defense budget cuts could impact GD's ability to get lucrative contracts here at home.
But while those black clouds have impacted shares, there's ample reason not to ignore this stock.
For starters, Gulfstream's business is defensible thanks to a multiple-year backlog and a niche in building larger private jets. Adding to that, the defense business involves mission-critical projects that the Pentagon can't just summarily cut. With international sales to allies as a stopgap, GD should be able to continue its fundamental performance into 2012.
For income investors looking for exposure to defense, GD is a solid core income option.
General Dynamics, one of
Warren Buffett's holdings, shows up on a list of
19 Dividend Opportunity Stocks for 2012.