Raytheon: A Defensive Stock for Dividend Growth Investors

Defense contractor Raytheon (RTN) has enjoyed a quick uptick, along with peers Lockheed Martin (LMT) and General Dynamics (GD), on an announcement by Defense Secretary Robert Gates that provides some clarity around expected budget cuts and program reductions. Defense contractors (strong companies trading at attractive valuations) have been on the radar screen for value investors recently on concerns that budget cuts and austerity worldwide will reduce their business. At recent prices in the 50 area, RTN is attractive to investors who hold a long term view that the need for defense is ongoing, both for the U.S. and the world. I established a small position in LMT back in late November, and started following RTN and GD as prospects to increase my exposure to the sector. John Reese mentioned RTN in an article on his Guru strategy, suggesting it as an attractive pick based on Ken Fisher's Super Stocks. I added RTN after the Gates announcement, based on valuation and an opinion that the current negativity toward defense contractors is overdone.... Read more

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