Best Lifetime Defensive Dividend Balances From Passive Income

The long history of the stock market tells us that one of the best things you can do with your money is to buy dividend stock. Time and time again, studies show that dividend stocks outperform unpaid stocks with healthy margins, and even when the market has delivered negative returns over certain decades, income-generating stocks still make gains.

Several years ago, JP Morgan Asset Management found that stocks that started and then raised their payouts over a 40-year period between 1972 and 2012 returned an average of 9.5% per year, versus just 1.6% for non-dividend stocks. Over a three-year grading, high-yielding securities outperformed low-yielding, non-earnings-yielding securities about two-thirds of the time.

Image source: General Dynamics.

It is one of the reasons why I think the defense industry is an excellent place to look for investments for passive income for life. They work in a core industry that may see a tidal growth rate over the years, but it’s a rare period in which defense spending is actually being cut. These are solid businesses that offer generally stable growth and also tend to throw off income streams that are equally reliable for investors.

Next pair of defense stock They are great companies to own for the long term.

general dynamics

general dynamics (GD -1.33%) It is the third largest defense contractor behind Lockheed Martin And the Raytheon TechnologiesThe latter jumped to second place only through its acquisition of United Technologies in 2020.

General Dynamics generated $38.5 billion in revenue last year, 79% of which came from Defense contracts for military equipment Such as nuclear submarines, the M1A2 Abrams tank, the Stryker combat vehicle, and various weapons systems including heavy machine guns and grenade launchers. The rest comes from the civil business, particularly commercial aircraft sold under the Gulfstream banner, which generated revenue of more than $8.1 billion last year.

Both areas were profitable focus areas for General Dynamics, which helped support its earnings. Earlier this year, the defense contractor raised its quarterly payout 5.9% to $1.26 per share, or $5.04 per year, the 25th consecutive year it has increased its dividend.

The return is a healthy 2.2% annually, and with stocks trading at 16 times next year’s earnings estimates, 1.7 times sales, and 15 times the free cash flow it produces, General Dynamics offers a great way to invest in defense with your portfolio.

3M

You don’t usually think 3M (mmmm -0.53%) As a defense industry stock since they are best known for Post-It notebooks, Scotch brand tape, and more recently N95 masks. But it also provides products and services for the military, from protective solutions for surfaces and equipment to headphones, high-visibility clothing, and eyewear.

3M has been around for over 100 years and has successfully weathered all kinds of economic markets and geopolitical events Still a strong and growing $81 billion business. It generated $35.4 billion in sales last year, up 10% from the previous year, with operating income growing 3% to $7.4 billion.

Notably, 3M has paid investors dividends for nearly that entire period, and has raised the payments for 64 consecutive years, placing it among a select group of stocks called Distribution kings.

Through recessions and depressions, world wars and pandemics, 3M has persevered and will continue to do so as it pays its shareholders a stream of revenue over their lifetime.