Why the Defense Sector's Yields Are Shrinking?

Though investors had every right to expect the defense sector to struggle over the last year, the way defense stocks Lockheed Martin (NYSE: LMT  ), Northrop Grumman (NYSE: NOC  ), and Raytheon (NYSE: RTN  ) spent their precious shareholder capital sent other signals. Coming into 2012, these three businesses poured substantial amounts into share buybacks. In addition, all three pay solid dividends, providing astute investors signs that their ability to generate strong cash flows might have exceeded the market's expectations.

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Disclosure: Long LMT and NOC. Please review the disclaimer page for more details.