- General Dynamics is a well-positioned player in defense contracts.
- The stock is a Dividend Aristocrat with many years of future increases ahead.
- Income investors can reduce volatility and add diversification with General Dynamics.
General Dynamics can offer a high-quality option for income investors of all stripes. The company offers a multitude of reasons to own it that include safety, growth and of course, General Dynamics stock dividend growth. General Dynamics is a Dividend Aristocrat with the power to become a Dividend King given time to flourish.
Let’s take a look at an overview of the company and a closer look at the dividend yield, historical payout ratio and more. By the time you’re done reading, you’ll find out whether or not GD deserves a spot in your portfolio.
General Dynamics Overview
General Dynamics is a U.S. aerospace and defense company formed in 1954 from the merger of Electric Boat Company and Canadair Ltd., an aircraft manufacturer whose history predates General Dynamics by several decades. The company is famous for manufacturing Gulfstream business jets as well as nuclear submarines, missile destroyers and the M1 Abrams tank battle systems.
As for the General Dynamics overview, it is the fifth largest defense contractor in the U.S. and the fifth largest in the world. It operates in 45 countries via 10 subsidiaries and ranks among the Fortune 100. Among the company’s most noteworthy successes is the F-16 project which began in 1972. Eventually, orders for the plane reached 4,600 after it was authorized for non-U.S. markets.
General Dynamics' revenue topped $39 billion in 2022. The company employed more than 100,000 people and was operating in four primary divisions. Those divisions are aerospace, marine systems, combat systems and technologies. The technologies segment makes mission-critical IT networks and mission control systems that allow for high levels of accuracy from remote locations around the globe.
GD Dividend Stability and Growth
General Dynamics has a very unstable dividend payment but that is because it is growing. The company is a Dividend Aristocrat and has increased its payout every year for more than 25 years. The company’s dividend payment is backed up by some healthy metrics as well, metrics that suggest it can sustain another 25 years of distribution increases.
As of November 2022, the company had paid a regular dividend for 31 years and had increased it for 28. This is a key fact because it shows the company is disciplined, has a long-term vision and the balance sheet to withstand the ups and downs in the economy. When it comes to growth and dividend stocks to add to a portfolio, General Dynamics is a solid stock to use as a foundational investment.
GD Dividend Yield vs. Industry/Market
General Dynamics dividend yield tends to range in line with its peers. The stock was yielding about 2% in late 2022 but that’s not what’s important. The stock is a Dividend Aristocrat, which means it has increased its distribution amount every year for more than 25 years.
That is important because a growing distribution means an increasing yield on the original dollar invested and is a hedge against inflation. As for the general market, General Dynamics' yield tends to beat the broad market average too.
When added to a portfolio with a few dividend stocks with high yields it can give diversification and even reduce volatility. Its long-running beta is below 1.0 which shows it is less volatile than the S&P 500.
GD Dividend Payout Ratio
The GD dividend history shows the company has maintained a very healthy payout ratio over its lifespan. The payout ratio tends to run in the range of 40% which is not only healthy but sustainable for a Dividend Aristocrat of this quality. Investors looking to hold dividend stocks for the long term should be happy with this number.
GD vs. Defense Stocks
General Dynamics tends to trade in line with the rest of the defense stock group. Names within the group will trade at a premium or discount to the group and present selling and buying opportunities when they do. The stock’s yield tends to hover within the group range as well. The difference is that General Dynamics has one of the best track records of dividend payments and distribution increases so it is more attractive in that regard.
Dividend Capture Strategy for GD
The dividend capture strategy is simple for investors to use, but it can be hard to do successfully. The strategy relies on four key dates about General Dynamics’ dividend payments. Those dates are the declaration date, the date of record, the ex-dividend day and the day of distribution.
- Declaration date: The dividend declaration date is the day the dividend is declared. In the case of General Dynamics, that is about one month after each quarterly earnings release.
- The ex-dividend Date: The ex-dividend date is the date that matters most. Investors that want to capture General Dynamics dividend must own the stock on before this day at the end of trading.
- The Date of Record: The date of record is the day after the ex-dividend date. This is the day investors can sell their stock and still receive the upcoming dividend payment. It is also the day the company will check the rolls to see who is eligible for the payment.
- Day of distribution: The day of distribution is the day the dividend is paid. It does not matter if the stock is owned on the day of distribution. The only requirement to receive the dividend payment is to have owned the stock at the close of trading on the day before the ex-dividend date.
Step 1: Buy the stock.
The first step in the dividend capture strategy is to buy the stock. The goal is to buy the stock as close to the date of record as possible to avoid holding the stock too long and tying up capital. It’s okay to buy the stock on the date of record at any time up to the close of regular trading.
Step 2: Hold the stock.
The next step is to hold the stock. Investors who want to capture the upcoming dividend payment must hold the stock until after the record date. The only requirement to receive the upcoming dividend payment is to be a holder of record at the end of the business day on the date of record. That means holding the stock for less than 24 hours and being entitled to the dividend payment is possible.
Step 3: Sell the stock.
The third step is to sell the stock. This can be done as soon as the first day after the date of record which is the ex-dividend date. The trick is to sell the stock at break even or better because the share prices of stocks with well-telegraphed dividend payments tend to fall by the distribution amount on the ex-dividend date.
Step 4: Collect the dividend.
The final step is to collect the GD stock dividend. It doesn’t matter if the stock is owned on the day the dividend is paid only that it was owned on the date of record. If the stock was owned at the close of business on the date of record the investor is entitled to the dividend payment.
Investors Can Get Aggressively Defensive with General Dynamics Stock
General Dynamics is a world-leading aerospace and defense stock with commercial and governmental lines of business. Not only is the company’s business relatively stable due to its large exposure to government contracts but the dividend is safely growing. Counted amount the Dividend Aristocrats, General Dynamics is a defense stock that investors can get aggressively defensive with because it's a dividend stock you can buy during inflationary times or non-inflationary times.
Does General Dynamics pay a dividend?
General Dynamics dividend history not only pays a dividend but it is an attractively growing distribution compared to its peers. The yield varies along with the share price but the distribution has been growing for 28 consecutive years. A quick overview of how to invest in GD proves that it is a Dividend Aristocrat with the power to continue increasing its payment for many more years to come.
How often does General Dynamics pay dividends?
General Dynamics pays dividends on an annualized basis that are distributed in four quarterly payments. The payments are declared once per quarter about after the latest earnings report. The company will also split the stock from time to time.
When did General Dynamics split?
General Dynamics's dividend history has three stock splits in it. These splits were on April 11, 1994, April 2, 1998 and March 26, 2006. Each split was a two-for-one split that doubled the available shares.
Companies Mentioned in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|General Dynamics (GD)||$223.50||+1.5%||2.26%||18.32||Moderate Buy||$267.15|