Something unusual happened last week in Newport News, Virginia. The visitors? Not journalists or investors, but members of the British House of Commons. What were they doing at an American shipyard? Simple: they came to see for themselves how HII – America’s largest military shipbuilder – is contributing to one of the most important defence projects of our time.
What is AUKUS?
AUKUS is a military partnership between Australia, the United Kingdom, and the United States. Its goal? Help Australia acquire nuclear-powered submarines. Not armed with nuclear weapons, but with propulsion that makes them fast, quiet, and hard to detect. It’s all about securing the region – and sending a strong message to powers like China.
Why was this British visit important?
Tan Dhesi, chairman of the Defence Committee, said it best: “We want to see how things are really done.” And yes, HII’s shipyard is impressive. It’s one of just two places in the U.S. where nuclear submarines are built. The British delegation received briefings on the entire process – from welding steel to workforce training. They even visited the company’s in-house apprentice school.
What makes HII stand out?
- The only builder of nuclear-powered aircraft carriers in the U.S.
- Over 135 years of experience working with the U.S. Navy.
- A 44,000-strong workforce building ships, AI tech, cyber defence tools, and unmanned systems.
- A focus on training the next generation through dedicated schools – soon also in Australia.
What does this mean for investors?
For those investing in defence stocks, HII is a key player. The company offers:
- A reliable dividend of $5.40 per year, raised for 11 years in a row.
- A strong market position thanks to unique capabilities and long-term government contracts.
- Growth potential driven by rising global defence spending, especially in the U.S., Europe, and now Australia.
Still, there are challenges. In 2024, net income dropped to $550 million and free cash flow was negative due to heavy investments in people and innovation.
What should investors take from this?
Think of HII as a defensive stock – in every sense. It offers:
- Protection from economic swings, thanks to stable government contracts.
- Exposure to international partnerships like AUKUS.
- A chance at steady dividend income, even in uncertain markets.
Just a note: HII shares are trading around $227, close to Goldman Sachs’ price target of $234. That means limited short-term upside.
What’s next?
The UK Defence Committee will stay involved to ensure the success of AUKUS. HII continues to invest in technology, people, and global collaboration. As an investor, you can keep track through earnings reports, new contracts, and AUKUS updates.
Would you invest in a company that’s literally building the submarines of the future? Or are you waiting for a price dip first? Let us know in the comments.
