With its 25th straight annual dividend increase, General Dynamics (GD) has finally joined the dividend aristocrats list here.

However, even more impressive than the length of this streak is the torrid pace of payout growth GD investors have enjoyed.

Specifically, the company has grown its dividend at 14.1% annually since 1992, helping General Dynamics’ shares nearly double the broader market’s annual total return (15.7% vs 8.8%).

Let’s take a closer look at this defense contractor to see what gives it such a wide moat and allows it to treat dividend growth investors so well.

More importantly, learn if GD’s excellent payout growth track record is likely to continue for many more years to come.

Business Overview

Founded in 1899 in Falls Church, Virginia, General Dynamics grew largely through acquisitions of military-related companies until the 1990s when it decided to sell off most of its businesses.

The company then started expanding again by acquiring combat vehicle businesses, information technology (IT) companies, shipyards, and Gulfstream Aerospace Corporation.

Today, General Dynamics is one of the world’s leading global aerospace and defense companies that sells everything from business jets to submarines to combat vehicles to IT communications systems.

The company’s 100,000 employees are located across more than 40 countries and operate four business segments:

Aerospace (27% of 2016 revenue, 40% of 2016 operating profit): designs, develops, manufactures, and outfits business-jet aircraft (Gulfstream, which commands 30% global market share), as well as provides aircraft services, such as maintenance, repair, aircraft management, charter, fixed-base operational, and staffing services. It also performs aircraft completion services for other original equipment manufacturers. Its operating history dates back more than 50 years.

Combat Systems (18% of revenue, 21% of operating profit): designs, develops, produces, and modernizes, combat vehicles, weapons systems, and munitions. This group offers wheeled combat and tactical vehicles including main battle tanks and tracked combat vehicles, as well as providing armaments and maintenance and logistics support and sustainment services.

Information Systems and Technology (29% of revenue, 23% of operating profit): provides technologies, products, and services that support a range of military, federal/civilian, state, local, and commercial customers. This group offers IT solutions and mission support services; communication, command-and-control, and computer mission systems including imagery, signals, and multi-intelligence systems for customers in the defense sector, intelligence and homeland security communities, as well as foreign governments allied with the U.S.

Marine Systems (26% of revenue, 17% of operating profit): designs, constructs, and repairs surface ships and submarines for the United States Navy and Jones Act ships for commercial customers. This group offers nuclear-powered surface combatants, auxiliary and combat-logistics ships, and commercial product carriers and containerships. It provides design and engineering support services, as well as maintenance, modernization, and lifecycle support services.

Most of General Dynamics’ revenue is from the U.S. Government (60%) with the remainder from U.S. commercial customers (15%), and international commercial and military customers (25%).

Business Analysis

General Dynamic’s strong record of dividend growth and excellent long-term total returns is driven by the company’s wide competitive moat. This is particularly true with regards to its Department of Defense (DoD) business, in which the military only works with a few trusted companies, with proven expertise in delivering on important weapons programs and IT services platforms.

For example, due to the need for more advanced ships with all-electric propulsion, stealth characteristics, electromagnetic catapults, and advanced weapon systems, General Dynamics and Huntington Ingalls Industries (HII) have a duopoly in this industry, as they control the only five shipyards that build U.S. Navy vessels.

When the Navy needed someone to build 28 Virginia class nuclear attack submarines, as well as 12 Columbia class ballistic missile subs, General Dynamics was one of the few companies with the facilities and technical background to get the job done, so it won the primary contractor position on both.

Another part of GD’s moat is the complex nature of military contracts, most of which are fixed-price, cost plus arrangements (32% of total revenue in 2016) that take years to bid on and finalize.

Most cost overruns are shouldered by the company and thus smaller firms, who might not survive year-long delays and higher-than-expected costs ,are generally not seriously considered by the Pentagon.