Investing In Firearms And Ammo Companies
There’s no question we live in a very dangerous world. Terrorist acts, murders and personal attacks seem to bombard the headlines on a daily basis without an end in sight. Because of this sad fact, when it comes to personal safety, most Americans often turn to some form of personal firearm for protection. While violent crimes and other terror acts seem to continually be on the rise, it seems that price is no object when it comes to our personal safety. That being said, there are a number of dividend paying companies in the guns and ammo sector that might find a home in your dividend portfolio as more Americans embrace firearms as a form of personal self defense. With more guns and ammo being sold certain companies seem poised to benefit from this rising violent trend.
First up, we’ll examine Alliant Techsystems Inc. (ATK). Headquartered in Arlington, Virginia, ATK supplies ammunition, firearms, and shooting accessories for the hunting and outdoor recreation markets. It also provides the military small, medium, and large caliber ammunition; propulsion systems for tactical missiles, precision munitions; gun systems; and warheads. Currently yielding a low 1.00% dividend with an equally low payout ratio of 11.0% based on an EPS of 10.76, ATK has plenty of room to continue paying and increase its distributions. On the valuation side of things ATK has a current PE of 12.02 which is well below industry peers and the S&P. Forward PE makes this stock look even cheaper at only 10.00.
Firing up our next dividend stock is Olin Corp. (OLN). Based in Clayton, Missouri OLN produces and manufactures many specialty chemicals but is probably most famous for its Winchester division which develops, manufactures, and sells rifles under the Winchester name. OLN also produces and sells small caliber military ammunition for use in infantry and mounted weapons systems. Currently yielding a healthy 3.20% with a moderate payout ratio of 50.6% based on an EPS of 2.00, OLN has a dividend that is considered to be safe. Looking at the valuation of OLN the stock currently sports a current PE of 11.64 which, like ATK, places it well below industry peers and the S&P. Forward PE for the stock is a little higher at 12.58. While not a pure play firearm company, OLN does offer company diversity as is operates in three distinct segments only one of which is related to firearms.
Shooting on down the line is another firearm company that is synonymous with a famous firearm, Sturm, Ruger & Co. Inc. (RGR). Headquartered in Southport, Connecticut, RGR designs, manufactures, and sells various firearms including single-shot, auto loading, bolt-action sporting rifles, revolvers and shotguns under the Ruger name. Currently yielding a very generous 4.00% with a moderate payout ratio of 50.6% based on an EPS of 5.09, RGR, like ATK and OLN, has a very safe dividend with room to grow. Looking at the valuation of RGR it has a current PE of 10.11 with a slightly higher forward PE of 12.43. Again, like the two stocks mentioned before, on a pure PE basis RGR is cheaper than many industry peers and the S&P as well. But as we all know, valuation cannot be measured with just a PE number.
Our final guns and ammo dividend stock is National Presto Industries Inc. (NPK). Based in Eau Claire, Wisconsin, NPK is probably the most diverse of the companies mentioned as it produces and sells many houseware items such as skillets, griddles, corn poppers, waffle makers, pizza ovens, electric tea kettles, rice cookers, coffee makers and 40mm ammunition, medium caliber ammunition cartridge cases, firing devices, smoke and tear gas grenades as well as stun munitions. Next time you think of waffle makers and ammunition, think National Presto Industries Inc. These diverse offerings remind me of another company I mentioned not long ago as my October stock purchase consideration, Hawaiian Electric Industries Inc. (HE) which operates as an electric utility and a bank. I guess some company conglomerates make for some interesting combinations. NPK is currently yielding a relatively low 1.60% with an extremely high payout ratio of 100.00% based on an EPS of 5.05. The current PE of NPK is 12.2 which is well below the market in general. From a dividend perspective, NPK might not be the safest of the income producers at its present state.
Clearly, there are some pretty diverse names and companies to invest in if you are looking to add exposure to the guns and ammo sector in your portfolio. Are you firing up your dividend portfolios with any of the names mentioned? Please let me know below.
Disclosure: Long NONE