Recent buy – General Dynamics (GD)

Bought 4 shares of General Dynamics⚔ (GD) for 164,5$/share. Total cost – 560 EUR (677$) Annual post-tax dividend inome – 10,2 EUR. Yield on cost – 1,8% post-tax.

Done some portfolio diversification and added some of this 😎

Jup the good old defence sector and one of the best stocks there is General Dynamics that has increased dividends each year for past 29 years, so its a Dividend Aristocrat. Company pay 1,1$/quarter or 4,4$ annualized and that makes it 2,7% pre-tax yield, which makes it one of lowest yield in my portfolio, but there is a catch here. First of all with EPS 11$ leading to P/E – x15 and payout ratio – 40% making the dividends safe and share price not to high. Last dividend increase was from 1,02$ to 1,1$ or +6% YoY. With such low payout I expect for this stock to be on the top of my dividend increase list. 10y ago dividends were just 0,42$/q so it has nearly tripled in past decade.

Now how is their financials. Y2020 income declined from 39,4bn$ in 2019 to 37,9$ and Net income slides from 3,5bn$ to 3,2$, but if you you look at Q4 you see that result was very similar to 2019Q4 sales 10,5bn$ Net income 1bn$. Covis had its tool on defence sector as well, but not to great extend. Balance also looking good with Equity ratio – 31% (15,7bn$/51,3bn$) and NetDebt/EBITDA – x2,3 (14,4bn$-2,8bn$/5,1bn$) and leading tp S&P A credit rating whitch is a high investment grade. What I like to note is that company managed to have a good combination of growing dividends, share number decrease by share buybacks and Equity increase, which makes the business viable in L/T perspective and with growing tensions with China I think defence spending is doomed to grow in US and its allies.

7 comments

  1. […] of our bloggers in the European dividend investment community and he wrote a small article about his latest addition to his portfolio: General Dynamics. What I like most is that he’s from the Baltic states, not something we see a lot in our […]

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  2. nice P

    Got to love these types of companies at these prices. I started a position in lmt today.
    Countrys will always be spending money on defence.

    keep it up

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    • Nice, LMT looks like a strong company as well. Not to high PE, low leverage, only equity is a bit low, but on a right track and growing. That “ethical” hypster investors open up some opurtunities in such “unethical” sectors. Maybe im bit old fashion, but since when it became unethical for democratic world to be strong. With such atitude ww2 was nearly lost.

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