You don’t need to be a genius to see why these two dividend stocks could be great long-term investments.
“True investors will do better if they forget the stock market and pay attention to dividend returns.” – Benjamin Graham
A lot of investors get really caught up in the fluctuating stock market, always on the lookout for rising stock prices. However, many overlook a powerful way to earn profits: dividends. If you’re looking for solid ideas, here are two companies with strong economic positions that can pay you dividends while you sleep!
Up in the Air
When considering investments, a good start might be the US Department of Defense, which has the largest military budget in the world. Lockheed Martin is a key player in the defense contracting space, reeling in roughly 75% of the $71 billion in defense contracts last year. That’s quite impressive.
A silver lining for long-term investors is the F-35 contract—it’s the biggest defense procurement program ever, ensuring revenue flow well into the 2060s. Global tensions with countries like China, Russia, Iran, and North Korea suggest that defense spending in the U.S. could rise as the Pentagon aims to modernize its military capabilities. This should be reassuring for Lockheed Martin investors.
On top of that, Lockheed recently updated its investors, highlighting its impressive advancements in drone technology. Just last week, they introduced Vectis—a collaborative fighter jet designed to enhance air superiority for U.S. and allied forces.
Vectis aims to be a rapidly adaptable, stealthy drone that could align well with existing fighter jets. This is particularly good news for worried long-term investors who might have concerns about Lockheed potentially phasing out profitable platforms like the F-35 in the coming decades.
Currently, Lockheed trades at a 27x price-to-earnings ratio, offering a solid dividend yield of 2.7%, while the stability from the F-35 contract and their growing drone initiative could be a win for investors.
The Brewing Giant
Ambef, the largest brewer in Latin America and the Caribbean, operates under the umbrella of Anheuser-Busch InBev. The company, which has been around since a merger in 1999 between two major Brazilian beverage companies, produces and sells beer in Brazil and other Latin American countries.
Beyond its historical background, Ambev shows it can really dominate the market. In fact, it holds about 60% market share in Brazil, 65% in Argentina, and even more than 70% in Bolivia. That’s quite a reach.
What’s beneficial for investors is that beer consumption per capita in many Latin American countries is still quite low compared to developed nations, suggesting future growth for Ambev. Additionally, there’s a noticeable trend where consumers often opt for foreign beers over local options. This presents an opportunity for Ambev to leverage Anheuser-Busch’s extensive premium beer portfolio, which includes brands like Budweiser and Corona.
It’s tough for local competitors to rival Ambev’s size, allowing the company to maintain its market presence through various economic cycles, all while offering a high dividend yield of 7.6%.
Is It Time to Invest?
Both of these stocks present healthy dividends, long-term potential, and competitive advantages. The complexity of Lockheed Martin’s business keeps new competitors at bay, while its long-term F-35 contracts offer financial stability. Ambev enjoys a scalable advantage over regional rivals, especially as beer consumption grows in developing markets. Both stocks could serve as solid cornerstones for portfolios focused on generating a little dividend income.
