I see it as positive as well. A payout ratio of 30% is nothing close to irresponsible. Share buy backs have become a bit of a shell game IMO, masking an actual lack of profit to meet estimates. I approve of them in moderation though. I happen to prefer companies that make an earnest attempt to achieve a 2% yield which grows. That is vital for a viable DGI portfolio. In the end it offers share price stability when things aren't going so well. Defense is and always will be cyclical, and the down cycle fairly unpredictable. In this case cyclical might just mean 8 years rather than 8 months. The US current defense budget is absolutely ludicrous in the opinion of many. It's at least considered unsustainable if you are fair minded at all. The politics will ebb and flow. There will be a time when the military spending pendulum swings. It can and will happen someday. Most of the first half of my military career was in an austere logistical environment. Defense contractors did "OK, not great".
The following is a little off topic but relevant IMO. I want to be invested in a company that will throw me a bone when they can. Special dividends actually make more sense to me for cyclical companies, rather than running your normal dividend up and then allowing it to choke you. Ford is actually a good and bad example at the same time. Yes their future looks bleak, very bleak. The whole industry has been bleak off and on since forever. They will cut their dividend to zero, then pay a large special "surprise" dividend when they can. Some would argue they should just pay a very low and sustainable dividend. They can't do that now, or the share price will visit $2. Point is, it's not easy managing shareholder distributions in a highly cyclical industry.
I am rapidly becoming overweight in defense. I'd be hesitant to recommend somebody else do that if they have a 25yr holding period. The last half of that could be very poor, or not. Anyway, their is a reason the aristocrat list is usually dominated by companies selling soda pop, soap and paper products. It's just much easier to achieve consistency.
The following is a little off topic but relevant IMO. I want to be invested in a company that will throw me a bone when they can. Special dividends actually make more sense to me for cyclical companies, rather than running your normal dividend up and then allowing it to choke you. Ford is actually a good and bad example at the same time. Yes their future looks bleak, very bleak. The whole industry has been bleak off and on since forever. They will cut their dividend to zero, then pay a large special "surprise" dividend when they can. Some would argue they should just pay a very low and sustainable dividend. They can't do that now, or the share price will visit $2. Point is, it's not easy managing shareholder distributions in a highly cyclical industry.
I am rapidly becoming overweight in defense. I'd be hesitant to recommend somebody else do that if they have a 25yr holding period. The last half of that could be very poor, or not. Anyway, their is a reason the aristocrat list is usually dominated by companies selling soda pop, soap and paper products. It's just much easier to achieve consistency.