Defense Company Adds AI to Support Dividend

Hello and welcome to Dividend Brief, the 2 times weekly newsletter focused on dividend investing.

Today, we will look into Honeywell, Ford, and Lockheed Martin, highlight a few dividend stocks worth watching, as well as share companies that are about to pay a dividend in the next few days.

Tech

Honeywell Explores Strategic Options to Reshape Business Portfolio

Honeywell is advancing its strategic review process as it explores options to enhance shareholder value. This ongoing evaluation, initiated earlier this year, includes the potential separation of its Aerospace division. The company plans to provide further details in its next earnings update, marking significant progress in its portfolio realignment strategy.

Over the past year, Honeywell has implemented various initiatives to streamline its operations and foster growth. Recent actions include acquisitions in key areas such as automation and energy transition, as well as the divestment of non-core businesses. Notably, Honeywell has announced plans to spin off its Advanced Materials division into an independent entity, reflecting its focus on optimizing its portfolio for long-term value creation.

Aligned with three core trends—automation, aviation advancements, and energy transition—Honeywell continues to position itself for transformative changes. With its strategic initiatives and operational focus, the company is working to drive growth, simplify its business, and deliver innovative solutions across diverse industries.

As Honeywell evaluates potential paths forward, its commitment to maximizing value for stakeholders remains at the forefront of its decision-making. This marks an important chapter in the company’s evolution, aimed at reinforcing its leadership across global markets.

HON currently trades at $233 and pays a dividend of $1.13 per share, a yield of 1.93%.

Automotive

Ford Faces Mounting Challenges as Jefferies Downgrades Stock

Ford is encountering significant challenges that are impacting its outlook heading into 2025. The company has been downgraded by Jefferies, which cited concerns including an excess inventory, strategic decisions regarding its European operations, and an increasing gap between warranty provisions and cash flows. As a result, Ford’s stock has taken a defensive stance, with shares seeing a notable drop following the downgrade.

One of Ford’s key issues is its ongoing warranty and quality concerns, which have created a growing financial gap of $8.5 billion. This issue, alongside potential restructuring in Europe, could continue to hinder Ford’s ability to generate positive cash flow for shareholders. The company’s electrification strategy, still in development, faces further uncertainty as analysts expect Ford to focus on range-extender technology in its future electric vehicles.

Despite a relatively robust balance sheet, Ford’s financial position remains under pressure as it seeks to balance conservative fiscal management with addressing ongoing operational challenges. The company's ability to navigate these obstacles will be critical as it aims to maintain profitability and stabilize its stock performance amid a shifting automotive landscape.

F currently trades at $10 and pays a dividend of 15 cents per share, a yield of 5.98%.

Defense

Lockheed Martin Launches AI Subsidiary to Support Defense Industry Integration

Lockheed Martin recently announced the creation of a subsidiary focused on helping U.S. defense companies integrate artificial intelligence into their operations. While AI has become increasingly popular across various industries for streamlining workflows, defense companies have been more cautious due to the sensitive nature of the data involved in training AI models within the sector.

This move comes on the heels of a partnership between Anduril Industries, a privately held defense tech firm, and OpenAI to advance AI solutions for national security. Lockheed's new subsidiary, Astris AI, aims to not only support defense applications but also drive AI adoption in select commercial sectors.

Donna O'Donnell, previously with Xerox, where she led efforts in automation and generative AI, will head Astris AI. The formation of this subsidiary aligns with broader industry trends, as executives speculate that the incoming administration's efficiency initiatives, possibly involving figures like Elon Musk, could encourage more collaborations between large defense contractors and smaller tech firms. These partnerships could explore new technologies, including AI, drones, and uncrewed submarines.

LMT currently trades at $490 and pays a dividend of $3.29 per share, a yield of 2.67%.

ABT increased its dividend payout to 59 cents per share, an increase of 7%. Its new forward yield is 2.08%.

INVH upped its dividend payout to 29 cents per share, an increase of 3.5%. Its new forward yield is 3.5%.

NVT boosted its dividend payout to 20 cents per share, an increase of 5%. Its new forward yield is 1.07%.

ODC dropped its dividend payout to 15 cents per share, a cut of 50%. Its new dividend yield is 0.72%.

TAC decreased its dividend payout to 4 cents per share, a cut of 4%. Its new dividend yield is 1.2%.

ABEV reduced its dividend payout to 4 cents per share, a cut of 71%. Its new dividend yield is 1.93%.