With the expected decline in U.S. defense spending there is going to be a great deal of pressure on the big industrial defense contractors. At the same time analysts are focusing on their dividends as the best play for them.
Lockheed Martin (NYSE:LMT) already pays $4.00 a year and leads the big contractors such as Boeing (NYSE:BA), Northrop Grumman (NYSE:NOC), Raytheon (NYSE:RTN) and General Dynamics (NYSE:GD) who have a range of $2.00 to $1.60.
NOC is predicted to raise their dividend in the near term based on historical data. The other companies may follow as all experienced flat revenue in 2011 but were able to increase earnings due to cost cutting. Without dividend increases they may not be attractive to investors.
Many of the companies like NOC and LMT are also utilizing stock buy backs to help with their valuations.
All the current indications are that these companies will have little change in their stock prices so potentially there will be changes to their dividends.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.