Updated 3/10/25

General Dynamics (NYSE: GD) has built a reputation as one of the most stable and shareholder-friendly defense companies in the market. With operations spanning aerospace, marine systems, combat systems, and defense technology, GD is a major player in government contracts, providing a steady stream of revenue that supports its long-standing dividend program.

For dividend investors, the appeal is clear. This is a company with a decades-long track record of increasing payouts, a solid financial position, and a business model built around essential defense needs. While the stock has had its ups and downs, its commitment to returning capital to shareholders remains rock solid.

Key Dividend Metrics

📈 Dividend Yield: 2.21%
💰 Annual Dividend: $6.00 per share
📆 Next Ex-Dividend Date: April 11, 2025
📊 Payout Ratio: 41.67%
📈 5-Year Average Yield: 2.31%
🔼 Dividend Growth Streak: Over 30 years
🚀 Recent Dividend Increase: 5.6%

Dividend Overview

Dividend reliability is one of the biggest reasons investors look at General Dynamics. With a current yield of 2.21%, it offers a decent return compared to other large-cap dividend payers. While this yield is slightly below its five-year average of 2.31%, it reflects strong investor confidence in the company’s long-term prospects.

The latest dividend increase of 5.6% continues GD’s pattern of steady, sustainable growth. Investors who prioritize consistency over high yield should appreciate this level of stability, as it signals a well-managed payout policy.

The payout ratio sits at a manageable 41.67%, meaning there’s plenty of room for continued dividend increases without straining the company’s cash flow. With a healthy balance sheet and government-backed contracts providing a stable revenue base, GD looks well-positioned to keep delivering for shareholders.

Dividend Growth and Safety

For those who value dividend growth over high current yield, GD has a lot to offer. The company has been increasing its dividend for over 30 years, making it a strong candidate for long-term income investors. Over the past decade, the average annual dividend growth rate has been around 7%, comfortably outpacing inflation.

A few key factors contribute to GD’s dividend safety:

• Strong cash flow: The company generated $4.11 billion in operating cash flow over the past year, which more than covers its dividend obligations.
• Low payout ratio: At just 41.67%, GD isn’t overextending itself. It maintains flexibility for reinvestment and potential buybacks.
• Long-term contracts: With a multi-billion dollar backlog, GD has reliable future revenue, reducing the risk of sudden cash flow declines.

Barring an unforeseen downturn in defense spending, General Dynamics appears well-equipped to keep growing its dividend in the years ahead.

Chart Analysis

Price Action

The chart shows that General Dynamics (GD) has been in a downtrend for several months, with a series of lower highs and lower lows. The stock peaked above $300 and has since pulled back significantly, dropping below both the 50-day moving average (light blue line) and the 200-day moving average (dark blue line). Recently, however, there has been a sharp recovery, with GD climbing back toward the $270 range after hitting a low near $240.

Moving Averages

The 50-day moving average has been trending downward since late last year, confirming short-term weakness. More importantly, the 50-day crossed below the 200-day moving average, forming what’s known as a death cross—a bearish technical signal that often suggests a longer-term downtrend.

Despite this, the recent move higher has GD testing the 50-day moving average from below. If the stock manages to break above it with strong volume, it could indicate a shift in momentum. However, the 200-day moving average is still well above the current price, which means GD would need more sustained upside to fully reverse the broader downtrend.

Volume and Buying Interest

Volume has been picking up as the stock has rebounded, which is a positive sign. Increased volume during an upswing often signals growing buying interest, suggesting that investors may be stepping back in after the sharp decline. The notable green volume bars in the most recent sessions indicate a possible shift in sentiment, with stronger accumulation.

That being said, volume was significantly higher during the October decline, showing that heavy selling pressure existed at that time. For a sustained recovery, GD would need to maintain strong buying volume as it pushes through resistance levels.

Relative Strength Index (RSI)

The RSI indicator at the bottom of the chart is now moving higher after spending a considerable amount of time in oversold territory. This suggests that the stock was previously oversold but is now experiencing a relief rally. RSI is approaching the 70 level, which is often seen as the overbought zone—a place where stocks sometimes pause or pull back before making another move.

If RSI stays elevated while GD continues climbing, it could indicate sustained bullish momentum. However, if RSI begins to roll over near 70, it might suggest that the stock is due for a short-term pullback.

Key Levels to Watch

• Support: The recent low near $240 remains a critical level. If the stock reverses back down, that area will need to hold to prevent further downside.
• Resistance: The 50-day moving average and the $275-$280 range are immediate resistance zones. If GD breaks above these, it could push toward the 200-day moving average near $285-$290.
• Volume Confirmation: If the stock moves higher but volume fades, the rally may not have much staying power. Watching how volume reacts at key resistance levels will be important.

Earnings Report Summary

General Dynamics wrapped up 2024 on a strong note, delivering solid earnings that showed steady growth across its business segments. The company pulled in $13.3 billion in revenue for the fourth quarter, which was up 14.3% from the same period last year. That’s a pretty impressive jump, showing that demand remains strong for its defense and aerospace products.

Net earnings came in at $1.1 billion, climbing 14.2% year-over-year, with earnings per share landing at $4.15, up from $3.64 the year before. Those numbers reflect better operational efficiency and cost control, helping the company turn more revenue into profit.

For the full year, General Dynamics reported $47.7 billion in total revenue, marking a 12.9% increase over 2023. Net income also grew, reaching $3.8 billion, pushing earnings per share up to $13.63. These results highlight the company’s ability to consistently grow, despite a tough economic and geopolitical environment.

One of the standout aspects of the report was strong cash flow. The company brought in $2.2 billion in operating cash flow during the fourth quarter, which covered 188% of net earnings. For the entire year, cash flow totaled $4.1 billion, or 109% of net earnings. That’s an important metric because it means General Dynamics is generating enough cash to invest in future growth, pay down debt, and continue rewarding shareholders with dividends.

The backlog—essentially its pipeline of future work—stood at $90.6 billion at the end of the year. That’s a huge number and a reassuring sign that demand isn’t going anywhere anytime soon. With steady government contracts and a well-diversified business model, GD remains well-positioned moving forward.

That said, the company did offer a more cautious outlook for 2025, which caught some investors off guard. Management is forecasting earnings per share of $14.80, which is below the $15.80 analysts were expecting. Revenue guidance of $50.3 billion is in line with expectations, but there are some concerns about softer aerospace revenues and operating margins.

Overall, General Dynamics ended 2024 with strong momentum, driven by solid revenue growth and a healthy backlog of orders. The company remains financially strong, though its conservative guidance for 2025 suggests management is taking a cautious approach to potential headwinds.

Financial Health and Stability

A strong dividend is only as good as the company’s financial health, and GD remains in solid shape. While it does carry some debt, it has maintained financial discipline over the years.

Balance Sheet Strength

• Total Cash: $1.7 billion
• Total Debt: $10.68 billion
• Debt-to-Equity Ratio: 48.39%

The debt load is notable, but it isn’t excessive for a company of this size, particularly in a sector where long-term contracts provide financial predictability. With a current ratio of 1.37, GD has enough liquidity to cover short-term obligations without issue.

Profitability

• Profit Margin: 7.93%
• Operating Margin: 10.24%
• Return on Equity (ROE): 17.44%

These numbers highlight the company’s strong capital efficiency. A return on equity of 17.44% is impressive, showing that GD is generating solid returns from its shareholders’ investments.

Valuation and Stock Performance

At its current price of $274.40, GD isn’t exactly a bargain, but it’s also not overpriced given its steady growth and defensive nature.

Valuation Metrics

• Price-to-Earnings (P/E) Ratio: 19.92 (trailing), 18.35 (forward)
• Price-to-Sales Ratio: 1.58
• Price-to-Book Ratio: 3.33

Compared to industry peers, GD trades at a moderate valuation, reflecting investor confidence in its long-term outlook. It’s not the cheapest name in the defense sector, but for investors seeking stability, it remains a strong option.

Stock Performance

• 52-Week Range: $239.87 – $316.90
• Beta: 0.59 (low volatility)
• 200-Day Moving Average: $284.32

The stock has come down from its highs, but it’s still well above its 52-week low. With a beta of just 0.59, GD tends to move less than the broader market, which can be appealing for income investors looking for lower volatility.

Risks and Considerations

Every investment comes with risks, and GD is no exception. While it has a strong dividend history and reliable government contracts, there are still factors to keep in mind.

Government Spending Cuts

Since most of GD’s revenue comes from defense contracts, any significant budget cuts could impact future earnings. While defense spending is generally stable, political shifts and policy changes could alter funding priorities.

Debt Load

The company has $10.68 billion in debt, which is manageable but something to watch, especially if interest rates remain high. Rising borrowing costs could affect profitability over time.

Aerospace Segment Exposure

While the defense side of the business is rock-solid, GD’s Gulfstream jet division is more sensitive to economic cycles. If demand for private jets weakens, it could create some near-term volatility in earnings.

Valuation Concerns

Trading at a forward P/E of 18.35, GD isn’t a screaming bargain. Investors looking for a better entry point might want to wait for a pullback to improve their margin of safety.

Final Thoughts

For dividend investors seeking steady income, General Dynamics is about as reliable as they come. It has a proven track record of increasing dividends, a sustainable payout ratio, and a business model backed by long-term government contracts.

While the yield isn’t the highest in the market, the company makes up for it with consistency and dividend growth. With over 30 years of increases and room for future hikes, GD remains a strong pick for those looking for long-term income and stability.

The stock isn’t cheap, but for those who already own it, it’s a solid hold. For new investors, watching for a slight dip could provide a better entry point. Either way, GD continues to be one of the most dependable dividend stocks in the defense sector, making it a great consideration for long-term income-focused portfolios.