Lockheed Boosts Dividend - Analyst Blog


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Lockheed Martin Corporation ( LMT ) has announced that it will increase the quarterly dividend rate to $1.15 per share, up approximately by 15 cents from the current payout of approximately $1.00 per share.

The proposed hike would bring the annual dividend to $4.60, up 15% from the previous payout. The increased quarterly dividend will be paid on December 28, 2012 to shareholders of record at the close of business on December 3, 2012.

With the current annual dividend rate of $4.60 and the current price of $92.46 (as of September 27, 2012), the company had a dividend yield of approximately 5%.

This is the tenth consecutive annual double-digit increase of the company's dividend. In September 2011, the company had increased its quarterly dividend by 33% or 25 cents per share from 75 cents per share to approximately $1.00 per share. The company had also increased its share repurchase authority by $2.5 billion under its share repurchase program. During the second quarter of 2012, the company repurchased 2.2 million shares at a cost of $186 million. Currently, the company has remaining authorization of $2.9 billion for future share repurchases.

Recently, in September 2012, one of the company's peers Northrop Grumman Corporation ( NOC ) has authorized an increase in the company's outstanding share repurchase authorization to $2 billion of common stock in order to focus on improving shareholder value.

Lockheed's cash and cash equivalents were $3.8 billion at the end of June 30, 2012, versus $3.3 billion at the end of June 30, 2011. The cash position seems to be stable enough to maintain its trend of dividend increase.

Moreover, the company is flooded with contracts. Recently, Lockheed had received a $111 million Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor Performance Based Logistics contract from the U.S. Army. A few days back, the company received a five-year contract worth $1.05 billion to provide more than 200 digital cockpits and integrated mission systems and sensors for the Navy's MH-60R "Romeo" and MH-60S "Sierra" helicopters.

Based in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Lockheed Martin is the largest U.S. defense contractor that guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. Going forward, we believe Lockheed Martin has significant upside potential based on the Obama administration's focus on Intelligence Surveillance Reconnaissance (ISR), unmanned systems, force protection, cyber security, and missile defense.

Lockheed is focusing on fulfilling the commitments made to customers while increasing the efficiency of its operations, despite the uncertain environment. The company presently retains a short-term Zacks #2 Rank (Buy) that corresponds with our long-term Outperform recommendation on the stock.

Lockheed is expected to release its third-quarter 2012 results on October 22, 2012. The Zacks Consensus Estimates for third-quarter 2012 and fiscal 2012 are currently at $1.85 per share and $8.10 per share, respectively.

LOCKHEED MARTIN (LMT): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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