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The events in the Middle East is a reminder to us and to many governments that the world is a dangerous place. There is also recent news that China is raising it's military budget by more than 12% for 2011. Read more about that here. In spite of the desire to cut military spending in the U.S., there is a need to maintain and develop defense systems and offensive weapons to counter future threats worldwide. With that in mind, there are a number of high quality defense and aerospace companies that offer solid dividends, earnings growth and reasonable P/E ratios. These companies have developed some amazing products with cutting edge technology and engineering. I encourage you to visit the company websites which I have linked to below. Here are the five companies:

General Dynamics (NYSE:GD) shares are trading at $75.45. General Dynamics is a leading defense contractor with a diversified line ranging from Gulfstream jets to shipbuilding and tanks. General Dynamics' website is here. The 50 day moving average is $74.16 and the 200 day moving average is $65.91. Earnings estimates for General Dynamics are just over $7 per share in 2011 and even more for 2012, so the PE ratio is about 10. General Dynamics pays a dividend of $1.88 per share which is equivalent to a 2.5% yield. I think these shares would be a strong buy on any pullbacks to about $70.

Lockheed Martin Corporation (NYSE:LMT) shares are trading at $79.30. Lockheed is a major aerospace and defense contractor. This company makes the A-10 Thunderbolt, the C-130J Super Hercules tactical airlifter, the F-16 Fighter, and more. Lockheed's website is here. The 50 day moving average is about $76.73 and the 200 day moving average is about $72.60. Earnings estimates for Lockheed are about $6.94 per share in 2011 and considerably more for 2012; which puts the PE ratio at about 11. Lockheed pays a dividend of $3 per share which is equivalent to a 3.8% yield. I think these shares would be a strong buy on any pullbacks to about $73.

Boeing Company (NYSE:BA) shares are trading at $70.88. Boeing is a leading manufacturer of jetliners, military aircraft and other aerospace and defense systems. Boeing makes the famed 747 airliner, and has new aircraft like the fuel efficient 787 Dreamliner coming soon. Boeing's website is here. The 50 day moving average is about $69.86 and the 200 day moving average is about $66.12. Earnings estimates for Boeing are over $4 per share in 2011. Boeing pays a dividend of $1.68 per share, which is equivalent to a 2.3% yield. I think these shares would be a strong buy on any pullbacks to about $66.

Raytheon Company (NYSE:RTN) shares are trading at $51.79. Raytheon is a major aerospace and defense contractor. This company is well known for it's missile defense systems. Raytheon's website is here. The 50 day moving average is about $50.10 and the 200 day moving average is $47.51. Earnings estimates for RTN are about $4.98 per share in 2011 which gives the shares a PE ratio around 10. RTN pays a dividend of $1.50 per share which is equivalent to a 2.9% yield. I think these shares are attractive on any pullbacks to about $50.

Northrop Grumman Corp. (NYSE:NOC) shares are trading at $67.17. Northrop is a leading manufacturer of ships, aerospace and defense systems. Northrop makes the F-35 Joint Strike Fighter and unmanned aircraft such as the Global Hawk. Northtrop's website is here. The 50 day moving average is about $67.52 and the 200 day moving average is about $61.11. Earnings estimates for NOC are $7.28 per share in 2011, which puts the PE ratio under 10. NOC pays a dividend of $1.88 per share which is equivalent to a 2.9% yield. I think these shares would be a strong buy on any pullbacks to about $65.

The data is sourced from Yahoo Finance and company websites. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: 5 Aerospace and Defense Stocks to Buy on Dips