L3Harris Technologies: A Future Dividend Aristocrat
Defense stocks have been punished during this election year. There are three reasons for this: high U.S. budget deficits, an election year and associated uncertainties, COVID-19 and the recent market downturn. However, I believe investors are over-worried.
Most defense platforms have decades-long life cycles and require continuous modernization and sustainment. Strategic competition with other countries remains a driving force for defense spending in the U.S. Irrespective of who wins the election, defense spending will likely continue to be robust. That said, it pays to be selective and buy undervalued defense stocks. I personally like L3Harris Technologies (LHX) due to its scale and market leadership in the communications sector after the merger of L3 Technologies and Harris Corporation. The stock is down about -10% for the year (as of this writing) and well off its 52-week high of about $231 per share due to the aforesaid issues and weakness in LHX’s commercial aviation markets. That said, the company raised guidance for 2020.
The added interest is that the dividend is growing rapidly and has been raised for 19 consecutive years making the stock a Dividend Contender. L3Harris Technologies is a future Dividend Aristocrat and Dividend Champion in my opinion. The stock is at a decent price now and I view the stock as a long-term buy.
L3Harris Technologies: A Future Dividend Aristocrat
Overview of L3Harris Technologies: A Future Dividend Aristocrat
L3Harris Technologies is the result of a merger between L3 Technologies and Harris Corporation completed on June 29, 2019, forming the sixth-largest defense contractor. Shareholders of L3 Technologies received 1.30 shares of Harris Corporation for each of their own shares outstanding. The company now reports four business segments: Integrated Mission Systems, (30% of revenue) Communication Systems (23% of revenue), Space and Airborne Systems (25% of revenue), and Aviation Systems (23% of revenue).
The majority of LHX’s sales are to the U.S. DoD and agencies, to other defense contractors, and to allied nations. The combined companies had pro forma revenue of over $18B in 2019…
Please read the complete article at my profile on Seeking Alpha.
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