Three Industrial Infrastructure Stocks to Buy

Three industrial infrastructure income investments to purchase should benefit as defense and aerospace demand rises amid war and increased commercial travel.

The three industrial infrastructure income investments to purchase could be fueled by expected defense and aerospace growth. Investors looking to profit may find the two exchange-traded funds and complementary stocks worth giving strong consideration.

Demand in the United States is on the rise due to the nation’s national security doctrine that seeks to use military modernization to deter adversaries, while European countries’ NATO budgets need to be beefed up to keep them in good standing with the organization, according to research report by Citigroup. That thrust is catalyzed by Russia’s war against Ukraine.

Company backlogs have grown 15% in the past three years and support the view that industry growth is projected at 5%. Profit margins are likely to expand as recent bookings reflect the current cost and supply chain environment, Citigroup wrote in its research note.

“Investors should look to invest in companies with accelerating revenue growth and margin expansion,” the report continued.

Ex-Pension Fund Chair Picks SPDR S&P Aerospace and Defense (XAR)

Bob Carlson, a former pension fund chairman who heads the Retirement Watch investment newsletter, told me that exchange-traded funds (ETFs) offer modest dividend yields focus on the aerospace and defense sector. Two of the funds he expressed liking are among the three industrial infrastructure income investments to purchase.

Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.

The three industrial infrastructure income investments to purchase include SPDR S&P Aerospace and Defense (XAR). The ETF is designed to track the S&P Aerospace & Defense Select Industry Index and is 100% invested in the industrials sector.

XAR recently had 32 holdings with 43% of the fund in the 10 largest positions. The five largest holdings in the fund recently, all greater than 4% of the fund, were Woodward Inc. (NASDAQ: WWD), Howmet Aerospace Inc. (NYSE: HWM), RTX Corp. (NYSE: RTX), Curtiss-Wright (NYSE: CW) and HEICO Corp. (NYSE: HEI).

The dividend-paying fund gained 7.53% over the last month, 5.86% over three months, 5.90% year to date and 26.95% over 12 months. Its 10-year average annual return is 4.45%.

Chart courtesy of www.stockcharts.com

Carlson Also Chooses Gabelli Commercial Aerospace & Defense (GCAD)

The second of three industrial infrastructure income investments to purchase is Gabelli Commercial Aerospace & Defense (GCAD). The ETF is fairly new, since it only has been open only since early 2023.

Like other Gabelli funds, GCAD is actively managed and does not try to track an index, Retirement Watch leader Carlson told me. GCAD invests in income-producing securities in the aerospace and defense industry.

Recently, about 95% of the fund was in the industrials sector and the other 5% was in technology. It owned 26 stocks and had 63% of the fund in the 10 largest positions.

The five biggest holdings were Moog (NYSE: MOG:A), Boeing (NYSE: BA), Spirit Aerosystems Holdings (NYSE: SPR), Ducommun (NYSE: DCO), and Curtiss-Wright.

GCAD gained 7.11% in the last month, 8.93% for the past three months, 12.26% for the year to date and 33.76% over the last 12 months. Its dividend yield is 0.89%.

Chart courtesy of www.stockcharts.com

Three Industrial Infrastructure Income Investments to Purchase: Curtiss-Wright (CW)

Davidson, N.C.-based Curtiss-Wright (NYSE: CW) is the third of four industrial infrastructure investments to purchase. The dividend-paying company dates back to Orville and Wilbur Wright’s first flight in 1903, along with Glenn Curtiss, regarded as a pioneer of naval aviation.

In 1929, the companies founded by these three great aviation innovators led to the creation of Curtiss-Wright Corporation, combining Curtiss Aeroplane and Motor Company and Wright Aeronautical Corporation. At the time of the merger, Curtiss-Wright ranked as the largest aircraft company.

The company focuses on innovation and advanced engineering, while applying capability to key applications in high-performance markets. Curtiss-Wright’s management aims to develop long-standing customer relationships to support significant growth and profitability in the markets it serves.

The company’s revenues are generated by providing solutions through three segments: Aerospace & Industrial, Defense Electronics and Naval & Power. Those three niches arguably are among the largest and most vital industries in the world.

Three Industrial Infrastructure Income Investments to Purchase: Share Buyback Program

Curtiss-Wright recently announced a $300 million increase to its share-repurchase program, bringing the total authorization to $400 million. The company also declared a 5% increase to raise its quarterly dividend to $0.21 per share. In total, Curtiss-Wright has repurchased more than $450 million of shares since 2021.

The company will host an investor day in New York City on May 21, when DiPalma wrote he expects it to its long-term organic growth strategy and introduce three-year financial targets with growth assumptions. He acknowledged taking special interest in the company’s commentary about its commercial nuclear business. DiPalma also wrote he expects an update on Curtiss-Wright’s capital allocation priorities and mergers and acquisitions (M&A) strategy.

“We forecast mid-single-digit consolidated revenue growth through 2027,” wrote Louie DiPalma, Ln equity analyst with Chicago-based William Blair investment firm. “We expect operating margin to expand from 17.4% in 2023 to 17.8% in 2026 and 18.0% in 2027.”

Chart courtesy of www.stockcharts.com

Geopolitical Risk Rises With Death of Aid Workers and Gaza Civilians

Geopolitical risk unfortunately is rising. Israel is continuing its efforts to find and destroy an extensive tunnel system in neighboring Gaza that has been used to stockpile weapons, as well as hide the Hamas leaders and militants who were responsible for the Oct. 7 attack that killed an estimated 1,200 people and took 240 hostages.

But the Gaza Ministry of Health estimates that a total of about 35,000 Hamas fighters and civilians have lost their lives there since the war began Oct. 7. Those civilians include aid workers, including seven World Central Kitchen food providers who perished when the three vehicles that they used were fired upon by Israel Defense Forces (IDFs) who reportedly mistook them for militants.

Chef José Andrés, World Central Kitchen’s leader, called for an independent investigation and said the convoy was identified with his charity, which reported its planned movements to the IDF in advance. The IDF announced that two senior officers were dismissed after its probe of the incident.

U.S. President Joe Biden warned Israel’s Prime Minister Benjamin Netanyahu that the United States would start to withhold weapons from Israel is too aggressive with its military operations in Rafah, a key city in Gaza where Hamas has based many fighters. Netanyahu has said he is responsible for protecting his citizens from attacks, gaining the freedom of its hostages and eliminating the threat posed by Hamas. Hundreds of IDF soldiers have lost their lives since entering Gaza to carry out their military mission in response to the Oct. 7 raid of Israeli communities near its border with Gaza.

In Ukraine, Russia’s military forces keep advancing. Long-term shortages of artillery shells and other arms have hurt Ukraine’s efforts to fend off Russia’s unrelenting attacks as the U.S. Congress required time to reach a bi-partisan agreement to provide foreign aid.

Ukraine officials reported Friday, May 10, that a Russian armored attack in the northeastern Kharkiv region was pushed back, after Moscow’s forces launched an incursion across the border and sought to breach front lines. In the town of Vovchansk, 75km, or 45 miles northeast of Kharkiv, a local leader said it faced a heavy attack on May 10, forcing the evacuation of civilians. Among the 3,000 people who live in Vovchansk, at least one person was killed and five others injured in the barrage, the local leader said.

The three industrial infrastructure income investments to purchase have the potential to climb due to defense and aerospace growth. Investors seeking to profit from the gains may want to purchase shares while they are advancing.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Special Sale! Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for reduced pricing on multiple-book purchases.