General Dynamics Corporation (GD): An Undervalued Dividend Aristocrat to Buy Now
We recently published a list of the . In this article, we are going to take a look at where General Dynamics Corporation (NYSE:GD) stands against other undervalued dividend aristocrats.
Dividend-paying stocks are regaining popularity this year as investors look for ways to soften the blow of current market challenges. The S&P Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has fallen by a little over 1.2% since the start of 2025, compared with a 4.1% decline of the broader market. Analysts point out that dividends not only help boost overall returns early on, but there's also clear evidence that companies with growing dividends tend to deliver stronger performance. These stocks often provide better returns with less risk, stay ahead of inflation, and hold up well whether interest rates are climbing or falling.
According to S&P Indices' 'Research Insights,' dividends have accounted for roughly a third of total returns since 1926. This is largely because, unlike stock prices that can fluctuate, dividends represent a guaranteed gain once paid out. Even in strong bull markets like the 1950s, 1980s, and 1990s, dividends played a meaningful role in enhancing investor returns. However, their true value becomes especially clear in weaker market cycles, when capital gains are modest or even negative, dividends have often made up more than half of the total return. In some cases, they've been the deciding factor in keeping returns positive. In essence, dividends tend to matter most when market performance falls short.
A report from Fenimore Asset Management reveals that between 1972 and 2016, companies that either raised or initiated dividends consistently outperformed those that did not. Historically, a dividend hike has often been viewed as a sign that management is confident in the company's future. This concept is even the basis of the 'Dividend Discount Model,' which values a company based on expected dividend growth.
On average, firms that grew or introduced dividends delivered annualized returns of 9.8%, outpacing businesses that didn't pay dividends. These companies typically enjoy rising sales and earnings, generating more cash than they need for reinvestment, allowing them to reward shareholders regularly. This pattern also reflects a strong commitment by management and the board to return value to investors.
In contrast, companies that cut or eliminate dividends often struggle financially. These underperformers posted annualized returns of -0.6% during the said period, and such reductions usually point to a weakening business, limited growth prospects, or a need to redirect cash toward internal needs rather than shareholder payouts.
The report also highlighted that one of the key advantages of a growing dividend is its ability to preserve purchasing power over time. As inflation gradually pushes up the cost of living, dividend income needs to grow just to keep up. Assuming a long-term inflation rate of 2%, dividends must increase by at least that much to avoid losing value in real terms.
While investors seeking income may be drawn to stocks with high current yields, it's just as important to consider how fast those dividends are growing. Focusing solely on yield without looking at growth can be short-sighted. In the long run, companies that steadily raise their dividends provide income that keeps pace with or even exceeds inflation, offering greater financial security.
An aircraft maintenance team in a hanger working on a modern business jet.
For this list, we scanned the list of the S&P Dividend Aristocrats– the stocks that have raised their payouts for 25 years or more– and identified stocks with low forward P/E ratios. From there, we picked 11 dividend aristocrats with forward P/E ratios below 20, as of May 7, and ranked them accordingly.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
Forward P/E Ratio as of May 7: 18.35
General Dynamics Corporation (NYSE:GD) is a Virginia-based aerospace and defence corporation. The company provides a wide range of products and services across several sectors, including business aviation, shipbuilding and maintenance, land-based combat vehicles, weapons and ammunition, as well as technology solutions and services. The stock has surged by over 3% since the start of 2025.
In the first quarter of 2025, General Dynamics Corporation (NYSE:GD) reported revenue of $12.22 billion, up nearly 14% from the same period last year. The revenue also surpassed analysts' estimates by $279.2 million. The EPS of $3.66 also beat consensus by $0.18. All four segments reported year-over-year growth in both revenue and operating earnings, with particularly strong performance in the Aerospace segment. Aerospace revenue rose by 45.2%, operating earnings jumped 69.4%, and profit margins improved by 210 basis points, reaching 14.3%.
General Dynamics Corporation (NYSE:GD) also demonstrated a solid cash position in the most recent quarter. The company ended the quarter with $1.2 billion available in cash and cash equivalents. Moreover, it returned $383 million to shareholders through dividends. The company offers a quarterly dividend of $1.50 per share, having raised it by 5.6% in March. This was the company's 28th consecutive year of dividend growth, which makes GD one of the best dividend aristocrat stocks. The stock has a dividend yield of 2.23%, as of May 7.
Overall, GD ranks 10th on our list of the best undervalued dividend aristocrats to buy now. While we acknowledge the potential of GD as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than GD but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at .
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'But with tariffs likely to remain elevated and Chinese manufacturers facing broader constraints on their ability to sustain rapid gains in global market share, we think export growth will slow further by year-end.' Top US and Chinese officials will sit down in London today for talks aimed at defusing the high-stakes trade dispute between the two superpowers. Their trade war has deepened in recent weeks beyond tit-for-tat tariffs to export controls over goods and components critical to global supply chains. At a still-undisclosed venue in London, the two sides will try to get back on track with a preliminary agreement struck last month in Geneva. The US delegation will be led by treasury secretary Scott Bessent, commerce secretary Howard Lutnick and US trade representative Jamieson Greer. The Chinese contingent will be helmed by vice premier He Lifeng. A UK Government spokesman said: 'The next round of trade talks between the US and China will be held in the UK on Monday. 'We are a nation that champions free trade and have always been clear that a trade war is in nobody's interests, so we welcome these talks.' Investors in Europe appear more sceptical about the prospects of the US-China trade talks kicking off in London today. The FTSE 100, France's Cac 40 and Germany's Dax are all on track to open flat when trading gets underway later. Kathleen Brooks, research director at XTB, said: 'Asian stocks are rallying at the start of the week; however, European equity futures and US futures are taking a breather and are pointing to a slightly lower open later today.' She added: 'Stocks may need a new driver to extend last week's rally after investors scaled back their expectations for Federal Reserve interest rates cuts for this year. There are less than two cuts priced in by the Fed Fund Futures market by the end of this year. 'The number of rate cuts from the Fed could be determined by the outlook for US inflation, which is released later this week. As the growth data remain unaffected by tariffs for now, inflation could hold the key for US monetary policy.' Thanks for joining me. Stock markets jumped in Asia ahead of US-China trade talks due to get under way in Britain today. Shares were up from Hong Kong to Tokyo following a call late last week between US president Donald Trump and Chinese leader Xi Jinping. Representatives from the world's two largest economies are due to meet at a still undisclosed location in London in an attempt to revive a preliminary trade agreement reached in Geneva last month. The US delegation will be led by treasury secretary Scott Bessent, commerce secretary Howard Lutnick and US trade representative Jamieson Greer. The Chinese contingent will be helmed by vice premier He Lifeng. Relations soured earlier this month after President Trump accused China of violating the terms of the deal. 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Shares rose in Asia ahead of the second round of trade talks between Washington and Beijing, due later today in London. In South Korea, the Kospi added 1.9pc to 2,865.52. Chinese markets rose even though the government reported that exports slowed in May, growing 4.8pc from a year earlier after a jump of more than 8pc in April. Exports to the United States fell nearly 10pc compared with a year earlier. China also reported that consumer prices fell 0.1pc in May from a year earlier, marking the fourth consecutive month of deflation. Hong Kong's Hang Seng picked up 1.4pc to 24,119.64 while the Shanghai Composite Index climbed 0.4pc to 3,397.13. Tokyo's Nikkei 225 gained 1.1pc to 38,137.09 as the government reported that the Japanese economy contracted by 0.2pc in the January-March quarter. Australia's market was closed for a public holiday. On Friday, stocks gained ground on Wall Street following a better-than-expected report on the US job market. The gains were broad, with every sector in the S&P 500 rising. That solidified a second consecutive winning week for the benchmark index, which has rallied back from a slump two months ago to come within striking distance of its record high. The S&P 500 rose 1pc to 6,000.36. The Dow Jones Industrial Average added 1pc to 42,762.87 while the Nasdaq gained 1.2pc, to 19,529.95. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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Bitcoin's Rally Means All of Strategy's Purchases Are Profitable
(Bloomberg) -- The mini rally in Bitcoin over the past few trading sessions has made every purchase of the cryptocurrency by Michael Saylor's Strategy over the last four plus years profitable. Next Stop: Rancho Cucamonga! Where Public Transit Systems Are Bouncing Back Around the World Trump Said He Fired the National Portrait Gallery Director. She's Still There. US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Senator Calls for Closing Troubled ICE Detention Facility in New Mexico The former MicroStrategy Inc. announced earlier Monday that it had acquired an additional 1,045 tokens for $110.2 million from June 2 to June 8, or for an average price of $105,426 each. Bitcoin was up about 1.7% to $108,022 as of 12:39 p.m. in New York, and has climbed around 7.5% since June 5. Strategy has made around 70 separate purchase announcements since Saylor began to invest cash from the enterprise software maker's balance sheet into Bitcoin in the middle of 2020. That includes 15 purchases of $1 billion or more of Bitcoin, according to data compiled by Bloomberg. As the price of Bitcoin fluctuated over the years, many of the purchases were periodically under water. Saylor, who co-founded the Tysons Corner, Virginia-based firm and and serves as executive chairman, later begin selling common shares as well as preferred stock and debt to fund additional purchases. Strategy owns 582,000 Bitcoin, valued at about $62.9 billion, The overall average price per token is $70,086. The latest purchases were made with $112 million in net proceeds from the sale of the company's Strike preferred stock (STRK) and Strife preferred stock (STRF), according to a filing with the US Securities and Exchange Commission. Last week, Strategy sold another class of securities, called Perpetual Stride Preferred Stock, (STRD). The firm estimated it will realize net proceeds of about $979.7 million from the offering. The top 26 purchase announcements based on the average cost of Bitcoin have all happened in the last 12 months, data compiled by Bloomberg shows. Strategy is the leading corporate holder of the digital currency. Saylor has pledged to raise $84 billion in equity and debt. The Strategy playbook has inspired many copycats looking to share the same success from purchasing and holding cryptocurrencies to boost their share prices. Companies such as Mara, Gamestop, Semler and Trump Media have all announced plans to use cash to buy the cryptocurrency, but none have been able to replicate the successes Saylor's company enjoys. Shares of Strategy rose about 3.4% to $387.30 on Monday, and are up over 3,000% since July 2020. The S&P 500 Index has climbed around 93% during the same period, while Bitcoin has rallied about 1,060%. --With assistance from Tom Contiliano. The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again New Grads Join Worst Entry-Level Job Market in Years What America's Pizza Economy Is Telling Us About the Real One America Cast Itself as the World's Moral Leader. Not Anymore ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data