Why General Dynamics Stock Flew Almost 5% Higher Today

No matter their investing style, it's safe to say that nearly every person who puts money into stocks likes a dividend raise. These investor-pleasing moves are almost always met with approval, and that dynamic was in play Wednesday for veteran aerospace and defense company General Dynamics (NYSE: GD).

The company's shares closed the day nearly 5% higher after a session in which the S&P 500 index climbed by a relatively modest 1.4%.

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A development with the dividend

On Wednesday afternoon, General Dynamics announced that its board of directors had declared its next quarterly dividend would be $1.50 per share. That's nearly 6% higher than the previous quarterly payout of $1.42 per share.

The new payout will be distributed on May 9 to shareholders of record as of April 11, giving investors plenty of time to pile into the stock to take advantage. At the current share price, it would yield just under 2.3%.

The company didn't hesitate to mention that this marks the 28th year in a row it has enacted a dividend raise. Since the start of 2020, the payout has grown steadily from $1.10 per quarter to the present level.

In good times and bad

A consistent dividend-raising policy means that those shareholder disbursements get regular bumps no matter how the company is doing in the near term. General Dynamics' latest quarterly results weren't bad, necessarily, but they didn't impress the market.

At the end of January, the company unveiled its fourth-quarter and full-year 2024 figures. While it beat expectations on both revenue and profitability, certain business units -- such as its storied Gulfstream aircraft business -- posted sales figures that undershot analysts' estimates. In the wake of the release, traders sold the stock, and to some degree, that disappointment has lingered. But the stock is now about even year to date.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.