Are Passive Income Investors Going to Miss Out on These 2 Millionaire Making Stocks?

In the tumult that followed President Trump imposing sweeping tariffs on U.S. trading partners, investors threw the baby out with the bath water in the stock market. The Dow Jones Industrial Average suffered an unprecedented drop of more than 1,500 points on two consecutive days, and when trading resumed on Monday it was a wild roller coaster ride.

Starting off the day lower than where the market had previously closed, the Dow suddenly roared higher on a rumor Trump would postpone tariffs for 90 days, only to crash again when the White House squashed the rumor and said tariffs were going ahead as planned. The benchmark index ended the day 350 points lower.

Interestingly, the stock market collapse wasn’t caused by small retail investors, but rather by the so-called smart money. Hedge funds dumped stocks at the fastest rate in over a decade while money managers scaled back their exposure to U.S. equities to levels similar to 2023.

Individual investors, on the other hand, were buying up the stocks that went on sale during the market rout. According to JPMorgan Chase, retail investors bought $2.8 billion worth of stock, the second-highest level on record.

That is the right play to make, buying your favorite stocks when they give you a big discount like those offered last week. They may not have caught the exact bottom, but it was a smarter bet than the panic selling the supposed smart money was doing.

Below are two stocks that income investors in particular won’t want to miss out on. These dividend growth stocks offer intriguing valuations and long-term growth potential you will want to profit from.

General Dynamics (GD)

Defense contracting giant General Dynamics (NYSE:GD) is down 20% from recent highs, almost half of which came in the last week. That is a mistake. While our European allies are muttering about looking elsewhere than the U.S. to buy their military materiel in response to the tariffs, they have also said they are willing to negotiate with Trump and completely open their markets to the U.S. goods.

Regardless of what the EU does, U.S. defense contractors have relatively small exposure to international markets as most of their sales are to the U.S. government. Among the biggest defense stocks, Lockheed-Martin (NYSE:LMT) is most exposed with 26% of its $71 billion annual revenues coming from foreign customers. General Dynamics receives just 16% of sales from overseas, and that includes its Gulfstream corporate jet business.

Because GD operates in a mature industry and its profit margins are fairly regulated by the government, coupled with the fact its customers pay for research and development, it is able to return a lot of money to shareholders. Last month it increased its dividend 5.6% to $1.50 per share, which represents the 28th consecutive year it has increased its payout, making it a Dividend Aristocrat.

Wall Street forecasts General Dynamic will grow earnings 10% annually long-term, about four times greater than it has over the past five years. Trading at 14 times next year’s earnings and 1.4 times sales, GD stock is one income investors should be buying while it is on sale.

Applied Materials (AMAT)

Applied Materials (NASDAQ:AMAT) is the world’s largest supplier of wafer manufacturing equipment for the semiconductor industry with $27.6 billion in trailing 12 month sales. Particularly because of the growth in and demand for computer chips capable of handling the extensive and complex processing power artificial intelligence requires, Applied Materials has a long runway of growth ahead of it.

While it has been dinged by U.S. export controls on the sale of advanced chips, equipment, and technology to China, the semiconductor equipment manufacturer estimates its total sales hit in 2025 to be around $400 million, which is less than what a number of its rivals like Lam Research (NASDAQ:LRCX) and KLA (NASDAQ:KLAC) forecast.

Even so, AMAT stock has been nearly cut in half from its 52-week high hit last July and shares are down 18% so far this year. That represents an opportunity for income investors to buy this leading semiconductor stock, which just hiked its dividend 15% last month while authorizing a new $10 billion stock buyback program.

Because Applied Materials dominates its smaller rivals in the important areas of etch, deposition, and process control, as well as outspending them on R&D — AMAT spends over $3.2 billion annually — it will benefit most from the ongoing growth and demand in the semiconductor industry.

Shares trade at only 13 times next year’s earnings estimates and goes for 18 times the free cash flow it generates. That’s not bargain basement territory, but it offers value for the long-term 8% earnings growth Wall Street epxects.

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