These 2 Dividend Stocks Are Worth More of Your Money -- Starting Now

RTX yields 1.4%, directs ~40% of estimated 2026 earnings to dividends, trades at >27x 2026 EPS, and analysts forecast ~10% annual earnings growth over the next 3–5 years; U.S. military replenishment from the Iran war is cited as a demand tailwind. Waste Management has raised its dividend 23 straight years, pays ~46% of projected 2026 earnings, trades at ~28x earnings, and analysts expect ~11–12% annualized EPS growth over the next 3–5 years due to its regulatory landfill moat. Both names are presented as durable, buy-and-hold dividend ideas with fair valuations given their growth profiles; the article is a positive stock-picking commentary and is unlikely to move markets materially.

Analysis

Winners are not just the primes—look two layers downstream. A sustained DoD replenishment cycle amplifies MRO and spare-parts annuities (multi-year revenue visibility) and compresses lead times for independent component vendors, which raises bargaining power for primes that internalize service flows. For waste, regulatory siting friction creates a structural scarcity premium in landfill-backed cashflows that can be monetized via rate-case resets and landfill-gas-to-renewables projects, creating asymmetric optionality versus smaller haulers.

Key near-term catalysts are budget appropriation cadence and rate-case calendars; both can swing 6–12 month revenue trajectories. Tail risks differ: defense names face political re-prioritization and export-license drag that can delay multi-year programs, while waste operators face sudden regulatory rulings (emissions, diversion mandates) that can force accelerated capex and compress returns. Macroeconomic shocks that depress commercial activity are an underappreciated common-mode risk over 12–24 months.

Consensus positioning prices moat as permanent — that’s the contrarian opening. If you believe commodity/recycling cyclicality or a one-off political compromise on defense spending, downside is sharper than the story implies because earnings are already forward-loaded into current multiples. Tactical implementation should therefore seek asymmetric payoff structures that capture long-term annuity upside while capping near-term policy/execution risk.

Key Decisions for Investors

• Long WM equity + covered-call overlay: buy WM shares size 1–2% NAV, sell 6–9 month OTM calls (~10–15% OTM) to raise yield and set a 12-month target total return of ~12–18%. Risk: downside if municipal rate cases lose; set hard stop at -10% from entry or hedge with 5% cost put if tail protection desired.
• Directional RTX call-spread (18-month): buy RTX 18-month ATM call, sell nearer-term (6–9 month) higher strike call to fund premium. Rationale: captures multi-year contract reflows while limiting premium loss if budgets disappoint. Target 25–35% upside; max loss = net premium (expect ~25% chance of full premium loss under adverse appropriation scenario).
• Pair hedge for policy risk: long WM (core) size 1–2% NAV and buy 9–12 month S&P put (1–2% notional) to protect against recession-driven volume decline. Expect hit on hedge cost but preserves optionality in regulatory/industry-specific upside.
• Event trade — rate-case calendar: establish a small directional long in WM two weeks prior to major municipal rate-case decisions and scale out over 4–8 weeks post-decision. If favorable, take 30–50% of the position off around a 6–12% price move; if unfavorable, cut to stop loss at -8%.