25-04-2025
Why Isn't This Defense Stock In Your Portfolio?
Fastened seatbelt during a flight. Inside a Ryanair low cost budget airline in the European route ... More FR1818 from Thessaloniki Makedonia Airport SKG LGTS in Greece to Eindhoven Airport EIN EHEH in the Netherlands. (Photo by Nicolas Economou/NurPhoto via Getty Images)
It offers better returns than your bank savings, ignores market crashes, and is tailored for the new economic landscape. Who are we referring to? It's TransDigm Group (NYSE:TDG). Still overlooking it? We understand. It's not an exciting tech name or a new AI superstar. It may seem dull. However, this is precisely the tactical error you should sidestep if you aim to grow your wealth.
Evading significant fluctuations is crucial for wealth accumulation. The High-Quality portfolio, which aims to minimize volatility while providing compounding upside, has surpassed the S&P 500 and achieved returns exceeding 91% since its inception.
Let's see if you still consider TDG stock unexciting after what we'll share.
You've heard enough about tech stocks that fluctuate like trapeze artists. But what if there exists a stock that offers tech-like returns without the chaotic movements? One that provides you with a 5.5% dividend– right now – and possesses the strength to increase that payout continuously?
Introducing the defense stock that quietly exceeds expectations – TDG
At 5.5%, this dividend outperforms most savings accounts, money markets, and even Treasuries. But here's the catch – this dividend isn't a 'set-it-and-forget-it' yield. It has momentum behind it.
What does this signify? This isn't merely a dividend investment – it's a cash-generating machine with growth potential. With healthy margins and swift revenue growth, dividends are set to increase as well. This implies that yields could rise or stay consistent as the stock price appreciates. Either way – you benefit! You enjoy growing income year after year.
Many income stocks offer substantial dividends. Few provide them in conjunction with stability and capital appreciation.
Contrast that with your favorite tech stocks. Nvidia: -62% in 2022, Meta: -75% drop from peak to trough, and Tesla – well, let's not even discuss that.
With this defense investment, you're compounding quietly and steadily. And guess what – with its impressive margins, robust cash flow, and a DE ratio of 30%, this stock has considerable capacity to manage increased interest costs as debts are refinanced at higher yields in the coming years. This indicates that the risk to dividend growth is minimal.
Think defense stocks are dull? Think again.
Tariffs have returned. U.S.-China tensions are rising. The new industrial policy wave (whether called re-shoring, de-risking, or 'Make America Build Again') represents a favorable environment for defense expenses.
Defense firms are not only safeguarded – they are positioned to prosper.
And TDG has remained steadfast during market crises in the past.
However, as the saying goes – never put all your eggs in one basket. The Trefis High Quality (HQ) Portfolio is crafted to diversify stock-specific risks while providing access to potential growth. With a collection of 30 stocks, it has consistently outperformed the S&P 500 over the past 4 years. Why is that? Collectively, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; experiencing less volatility, as shown in HQ Portfolio performance metrics
