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Lockheed (LMT) Rewards Shareholders With 7.7% Dividend Hike

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Lockheed Martin Corporation LMT announced that the board of directors has approved a 7.7% increase in the quarterly dividend rate. The revised quarterly dividend will be $2.80, up from the previous rate of $2.60. The company’s new annualized dividend rate is $11.2 and the current dividend yield is 3.3%, better than the Zacks S&P 500 composite’s 1.4%.

Lockheed’s management has been annually raising the dividend rate and it belongs to an exclusive group of companies that have raised the dividend rate every year since 2003. The board of directors approved a dividend increase this month, leading to a whopping 244.6% total increase in annualized dividend over the last decade.

Along with dividend payment, Lockheed’s management continues to increase shareholder value by repurchasing shares. In the first six months of 2021, the company repurchased shares worth $1.5 billion. The board authorized an additional $5 billion for share repurchases, which resulted in a total authorization under the repurchase program of nearly $6 billion.

Can Lockheed Sustain Dividend Hikes?

Lockheed has a platform-centric focus and leveraged presence in the Army, Air Force, Navy, and IT programs of the U.S. Department of Defense that guarantee a steady inflow of follow-on orders. The company continues to clinch big defense deals from the U.S. government and allied countries and as a consequence, it exited second-quarter 2021 with a record backlog of $141.7 billion.

The projected fiscal 2022 defense budget has a provision for defense programs, which will benefit Lockheed. The budget has allotted $12 billion for the procurement of 85 F-35 Joint Strike Fighters, an investment of $1 billion for the procurement of the AEGIS Ballistic Missile Defense system and $0.56 billion for THAAD missiles. These allotments will assure regular contract flow for Lockheed.

Apart from domestic orders, the company also enjoys the advantage of having a wide international customer base. In 2020, 25% of total net sales were from international customers. The company is focused on expanding its international footprint, which continues to support earnings.

Courtesy of Lockheed’s global presence, strong backlog and contract wins, the company continues to generate strong operating cash flow, which provides assurance that it will be able to sustain shareholder-friendly moves in the future as well.

Price Movement

In the past three months, Lockheed has outperformed the industry it belongs to.

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Zacks Rank & Key Picks

Lockheed currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include The Boeing Company BA, Textron Inc. TXT and Embraer S.A. ERJ, each currently having a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boeing, Textron, and Embraer have a long-term (three to five years) earnings growth rate of 4%, 28.3%, and 17%, respectively.

The Zacks Consensus Estimate for 2021 earnings of Boeing, Textron, and Embraer has increased 82%, 3.8%, and 59%, respectively, in the past 60 days.


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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

EmbraerEmpresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report

Textron Inc. (TXT) : Free Stock Analysis Report

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