Best Single DG Stock RIGHT NOW

[Dividend Watcher]

(04-25-2015, 10:28 AM)Kerim Wrote: What arguments for RTN am I overlooking?

I had a pretty long reply written and then I went to answer the phone and my cat walked across the laptop and closed the window on me. Let's see if I can reconstruct it.

The P/E is a non-issue to me. The oil majors have maintained a lower P/E for the last few years because of the cyclicality of the oil market. We're experiencing that now. You would think the same could be said for the defense industry because war spending can be cyclical also. However, the threats have become more persistent the last couple decades. RTN has an immense intellectual property portfolio not only in the missile launching systems but also the radar/targeting systems as well. If the spending is not going directly to new hardware, there's a steady stream of money going towards maintenance and upgrades.

If you noticed, RTN recently put in a bid for Websense. RTN already had a cyberdefense division which you rarely hear anything about. You probably won't in the future either. The offer for Websense signalled to me that RTN was expanding in this field and it isn't just for government IT defense. Think water and power infrastructure, air traffic control, ground traffic control in big cities and the GPS system. HRS has a finger in this also.

On the other hand, demand for products from XOM will not be going away any time in the near future.

I happen to think both are fairly valued here. The deciding factor for me would be diversification and position size. I hold CVX instead of XOM and RTN. Both CVX and RTN have similar position sizes right now with CVX having a slight edge. I would lean towards more RTN right here only because of the prospects of a slightly higher dividend growth rate for the next few years.

I wouldn't argue about JNJ either but I think it's a little richer valued at this time. In 10 years from now it won't be much of a difference but over the short term it could be.