Group 1 - The article emphasizes the importance of returning to normalcy after the holiday season, indicating a preference for routine over the unpredictability of holiday schedules [1] - Leo Nelissen is identified as an analyst focusing on significant economic developments related to supply chains, infrastructure, and commodities, contributing to iREIT®+HOYA Capital [1] - The analysis aims to provide actionable investment ideas with a focus on dividend growth opportunities, highlighting the potential for income generation in the investment landscape [1]

Core Insights - The article emphasizes the importance of in-depth research on various income-generating investment vehicles such as REITs, mREITs, Preferreds, BDCs, MLPs, and ETFs [1] Group 1: Analyst Background - Leo Nelissen is identified as an analyst focusing on significant economic developments related to supply chains, infrastructure, and commodities [2] - He is a contributing author for iREIT®+HOYA Capital, aiming to provide insightful analysis and actionable investment ideas, particularly in dividend growth opportunities [2] Group 2: Analyst's Position - The analyst has disclosed a beneficial long position in shares of AM, UNP, RTX, and REXR through stock ownership, options, or other derivatives [3] - The article expresses the analyst's own opinions and indicates that no compensation is received for the article, aside from Seeking Alpha [3] Group 3: Disclosure Information - Seeking Alpha clarifies that past performance is not indicative of future results and does not provide recommendations or advice on investment suitability [4] - The views expressed may not reflect those of Seeking Alpha as a whole, and the analysts are third-party authors, including both professional and individual investors [4]

Core Insights - RTX Corporation is recognized as one of the 20 Best Performing Dividend Stocks in 2025 [1] - JPMorgan has raised its price target for RTX to $200, indicating a positive growth outlook for the aerospace and defense sector heading into 2026 [2] - RTX has secured significant contracts, including a $1.6 billion sustainment contract for F135 engines and a $2.8 billion contract for F135 engine production, highlighting operational momentum [3] Financial Performance - In Q3 2025, RTX raised its full-year adjusted earnings outlook to $6.10 to $6.20, up from $5.80 to $5.95, and increased its sales forecast to $86.5 billion to $87 billion from $84.75 billion to $85.5 billion [4] - Management has effectively managed tariff impacts and macroeconomic uncertainties, which is seen as a positive indicator for the business [5]

Core Insights - RTX Corporation (NYSE:RTX) is recognized as one of the best-performing quantum computing stocks in 2025, with significant recent contract wins in defense systems [1] Group 1: Recent Contracts and Collaborations - RTX's Raytheon has secured a $1.7 billion contract from Spain for four Patriot air and missile defense systems, marking the largest order for the Patriot system [1][2] - The contract includes radars, launchers, command-and-control stations, and training equipment, and involves collaboration with Spanish firms like Sener for missile components [2] - Earlier in December, Raytheon was awarded a $168 million contract to deliver Patriot systems to Romania, indicating a growing demand for the defense system in Europe [2] Group 2: Technological Advancements - On December 19, Raytheon announced a contract with the US Air Force to install its PhantomStrike radar on the X-62A VISTA testbed aircraft, which is designed for autonomous flight testing [3] - The PhantomStrike radar is noted for being compact, weighing under 150 pounds, and offers advanced features such as digital beamforming and multimode operations at a lower cost compared to similar radars [3] Group 3: Market Sentiment and Stock Performance - Wall Street analysts are optimistic about RTX, with J.P. Morgan's Seth Seifman reiterating a Buy rating and raising the price target from $195 to $200 [4] - John Godyn also initiated coverage with a Buy rating and a price target of $211, reflecting positive sentiment towards the stock [4] Group 4: Business Segments and Quantum Computing Focus - RTX operates through three main segments: Collins Aerospace, Pratt & Whitney, and Raytheon, with a focus on quantum computing led by BBN Technologies [5] - The quantum computing operations aim to develop algorithms for optimization, physics simulations, and advanced sensors for defense applications [5]

Core Insights - The article highlights the importance of a comprehensive and fundamental approach to analyzing the stock market, emphasizing the unique insights gained from a background in political economics [1]. Group 1 - The individual discussed has over a decade of experience in studying the stock market, which contributes to a deep understanding of macroeconomic factors and their impact on assets [1]. - The focus is on identifying hidden investment opportunities through thorough data analysis and research [1].

Market Overview - The S&P 500 has increased nearly 18% in 2025, marking the potential for a third consecutive year of double-digit gains for the broader US market [1] - Wall Street anticipates continued profit growth, with S&P 500 earnings expected to rise by approximately 15.5% in 2026, up from 13.2% in 2025 and 12.1% in 2024 [2] - Goldman Sachs forecasts a 2.6% growth in US GDP for 2026, slightly above consensus, indicating a supportive environment for stock prices [3] Dividend Stocks Performance - The Dividend Aristocrat index, tracking companies with at least 25 consecutive years of dividend growth, has risen over 6% this year, maintaining investor interest in dividend stocks for income and consistency [4] - A review of companies with the strongest returns in 2025 led to the selection of 20 dividend-paying stocks based on year-to-date performance, not on dividend size [6] Company Highlights C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) - YTD return as of December 30 is 58.08% with a dividend yield of 1.56% [9] - The company reported a profit beat in Q3 2025, attributed to its use of AI for operational efficiency, which has helped streamline logistics processes [10][12] - Revenue for the North American Surface Transportation segment increased by 1.1%, despite a challenging backdrop in US freight volumes [11] RTX Corporation (NYSE:RTX) - YTD return as of December 30 is 58.84% with a dividend yield of 1.48% [13] - The company secured a $1.6 billion sustainment contract for F135 engines and raised its full-year adjusted earnings outlook to $6.10 to $6.20, up from $5.80 to $5.95 [15][16] - RTX's ability to manage tariff impacts positively reflects on its business outlook, with a forecasted revenue increase to $86.5 billion to $87 billion [17] HCA Healthcare, Inc. (NYSE:HCA) - YTD return as of December 30 is 58.85% with a dividend yield of 0.61% [18] - The company reported a 2.1% year-over-year increase in same-facility admissions and a 6.6% increase in revenue per equivalent admission [20] - HCA aims to increase its market share from 27% in 2022 to 29% by 2030, supported by an aging population and ongoing investments in technology [21][22]

Core Viewpoint - The comparison between Textron (TXT) and RTX (RTX) indicates that Textron currently presents a better value opportunity for investors in the Aerospace - Defense sector [1] Valuation Metrics - Textron has a forward P/E ratio of 14.42, while RTX has a significantly higher forward P/E of 29.80 [5] - The PEG ratio for Textron is 1.44, indicating a more favorable valuation compared to RTX's PEG ratio of 2.92 [5] - Textron's P/B ratio stands at 2.09, compared to RTX's P/B ratio of 3.73, further highlighting Textron's superior valuation metrics [6] Earnings Outlook - Textron holds a Zacks Rank of 2 (Buy), suggesting a positive earnings estimate revision trend, while RTX has a Zacks Rank of 3 (Hold) [3] - The solid earnings outlook for Textron contributes to its classification as the superior value option compared to RTX [6] Value Grades - Textron has been assigned a Value grade of B, whereas RTX has received a Value grade of D, indicating a significant difference in perceived value [6]

Core Insights - Defense stocks, especially those with European exposure, experienced a significant decline following President Zelenskyy's indication that Ukraine may abandon its long-term NATO membership bid in exchange for security guarantees, which dampened near-term demand expectations for European arms manufacturers [1][4][10] Group 1: Market Reaction - The sell-off in European defense giants like Rheinmetall, Leonardo DRS, and Saab exemplifies market sentiment responding to geopolitical developments, particularly the potential reduction in military urgency due to peace discussions [3][4] - The shift in narrative regarding NATO membership has challenged the heightened demand environment that has supported the defense sector since 2022, leading to a rapid decline in share prices of pure-play defense companies [4] Group 2: Long-term Investment Thesis - Despite the current market fluctuations, the long-term investment outlook for global defense remains strong, driven by structural factors such as ongoing negotiations for "NATO-style" security guarantees that will require sustained military spending from European nations [5][6] - The war in Ukraine has permanently altered European security policy, resulting in a notable increase in military expenditure among NATO members, which reached $1.45 trillion in 2024, marking a 9.6% increase from 2023 and the largest annual rise since 2014 [6] Group 3: Global Demand Dynamics - The Ukraine conflict is part of a broader landscape of escalating geopolitical tensions, prompting allied nations in regions like the Indo-Pacific and the Middle East to enhance their military capabilities, thereby creating a diversified global demand for defense contractors [7][8] - Leading defense contractors such as Lockheed Martin, RTX Corp., and Northrop Grumman benefit from multi-year government contracts, providing them with strong revenue visibility and order backlogs that protect against short-term market volatility [8] Group 4: Investment Opportunities in Defense ETFs - The recent pullback in defense stocks presents a buy-the-dip opportunity in diversified defense ETFs, which mitigate risks by spreading investments across U.S. and European companies [2][10] - Notable defense ETFs include: - State Street SPDR S&P Aerospace & Defense ETF (XAR) with $4.75 billion AUM, up 48.3% year to date [12] - iShares U.S. Aerospace & Defense ETF (ITA) with $12.96 billion AUM, up 50.2% year to date [13] - Invesco Aerospace & Defense ETF (PPA) with $6.95 billion AUM, up 38.6% year to date [14] - Select STOXX Europe Aerospace & Defense ETF (EUAD) with $1.04 billion AUM, up 72.7% year to date [15][16]

Core Viewpoint - The article emphasizes that the trend of "International Rearmament" is set to become a structural and multi-year global demand driver for the defense industry, with defense stocks expected to be a key contributor to stock market growth over the next 2-3 years, particularly highlighting Raytheon Technologies (RTX.US) as a core beneficiary due to its higher international revenue and order exposure compared to peers [1][5]. Group 1: Defense Industry Trends - The defense industry is experiencing a significant investment surge, with U.S. aerospace and defense stocks recording a 36% increase in 2025, while European defense stocks have surged by 55%, outperforming the semiconductor sector's 45% rise [3]. - The article notes that traditional defensive sectors like utilities and consumer staples are not the best investment choices in times of geopolitical uncertainty; instead, the defense sector is positioned as an "alternative safe haven" due to its direct correlation with geopolitical events [4][6]. Group 2: Raytheon Technologies (RTX) - Raytheon is highlighted for its strong international business exposure, with approximately 31% of its revenue coming from international operations and 44% of its international backlog, indicating a higher visibility for future deliveries and revenue recognition [6][9]. - The article mentions that Raytheon's core defense business aligns well with the procurement trends of allies, particularly in missile defense and advanced systems, making it a prime candidate for benefiting from increased defense budgets in Europe [8][9]. - Citigroup has initiated coverage on Raytheon with a "Buy" rating and a target price of $211, noting its market capitalization of approximately $250 billion as of the last trading session [9].

Core Insights - RTX Corporation's Raytheon unit has secured a contract worth nearly $104.1 million to provide engineering support for the Evolved SeaSparrow Missile and NATO SeaSparrow Missile Systems, with completion expected by December 31, 2026 [1][9] - The contract includes purchases for the U.S. Navy and several allied nations, indicating broad international adoption of the ESSM missile [2][9] RTX's ESSM Missiles Overview - The ESSM missile is recognized as a benchmark in international production and development, meeting the needs of partner navies and third-party customers [3] - It provides reliable ship self-defense against various threats, including high-speed cruise missiles and low-velocity aerial threats, with over 330 successful live firings [4] Growth Potential for RTX - Increasing regional conflicts are prompting nations to enhance their defense capabilities, leading to higher investments in advanced missile systems [5] - The global market for missiles and missile defense systems is projected to grow at a CAGR of 4.97% from 2025 to 2030, which is favorable for RTX given its diverse portfolio of combat-proven missiles [6] Opportunities for Other Defense Companies - Northrop Grumman Corp. is positioned to benefit from the missile market, with a long-term earnings growth rate of 4.19% and a 2025 sales estimate of $41.88 billion, reflecting a 2.1% increase [7][8] - Lockheed Martin Corp. has a long-term earnings growth rate of 11.94% and a 2025 sales estimate of $74.44 billion, indicating a 4.9% increase [8][10] - Boeing Company has a long-term earnings growth rate of 31.33% with a 2025 sales estimate of $87.26 billion, suggesting a significant jump of 31.2% [10][11] RTX Stock Performance - Over the past six months, RTX shares have increased by 26.8%, outperforming the industry growth of 13.1% [12]