2 Contractors Hit Hard by Defense Cuts

The following video is part of our "Motley Fool Conversations" series, in which industrials editor and analyst Brendan Byrnes and technology editor and analyst Andrew Tonner discuss topics across the investing world.

In today's edition, Brendan and Andrew discuss the recently released Pentagon budget breakdown, which gave more guidance about how nearly a half-trillion dollars in defense cuts will be implemented. There were no major surprises in the budget for the major contractors. Lockheed Martin had been expecting delays on the massive F-35 fighter jet contract, and that's exactly what happened. Two companies that were hurt more were smaller players -- Aerovironment and Oshkosh. Brendan goes in-depth about what this budget means for those two companies, as well as for the big boys in the defense contracting space.

One of the reasons that defense contractors have proved fairly resilient in the face of defense cuts is their strong dividends. If you're looking for some great dividend plays but would rather avoid the defense sector, then check out our free report outlining our 11, top, dependable, dividend-paying stocks. It's called "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can access your complimentary copy today at no cost! Just click here to discover the winners we've picked.

Andrew Tonner has no positions in the stocks mentioned above. Brendan Byrnes has no positions in the stocks mentioned above. The Motley Fool owns shares of General Dynamics and Lockheed Martin. Motley Fool newsletter services recommend AeroVironment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 23, 2012, at 7:29 PM, jdwelch62 wrote:

    Yeah, LMT was on my short list of stocks to pick up when I have some more funds to invest, but at this point I think I'll wait and see whether "sequestration" is likely to kick in or not before jumping in. Love their dividend yield, and as a country we love our fighter jets, so I think long term (and I'm a long term guy) LMT will be OK, but right now they're bumping up against their 52 week high, even though their PE is only around 11.32. Gotta see which one of the Republican candidates comes out on top, too. I'd like LMT to pull back a bit before jumping in, too. Anyway, thanks for the report...

  • Report this Comment On February 24, 2012, at 1:25 PM, TMFNiner wrote:

    @jdwelch62

    Totally agree. I think LMT is a hold right now while we wait to see what happens with sequestration. Compelling valuation and dividend, though, for those perhaps less worried about defense cuts.

    Thanks for watching!

    Brendan

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