Lockheed Martin Sweetens Payout For Shareholders


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Getting a higher payout each year is a good thing. Aerospace giant and defense contractorLockheed Martin ( LMT ) has done just that for its shareholders for just over a decade.

Last week, the company raised its quarterly dividend by 16% to $1.33 a share. The dividend will be paid Dec. 27 to shareholders of record Dec. 2.

"We're proud to deliver to our shareholders the 11th consecutive annual double-digit increase of the Lockheed Martin quarterly dividend rate," said CEO and President Marillyn Hewson in a press release.

Lockheed Martin's dividend has now more than doubled in the past three years. At the new rate, the company pays $5.32 a year. This works out to a yield of about 4.2% vs. around 2.5% for the S&P 500 index. It has the second highest yield among the 27 dividend-paying stocks in the Aerospace/Defense group.

The company was last featured in The Income Investor column on Aug. 23, when its dividend yield was at 3.7%.

Lockheed Martin has vowed to return 50% of free cash flow to shareholders through dividends and share buybacks. It also lifted its stock buyback by $3 billion last week. The repurchase program has no expiration.

The Bethesda, MD.-based firm is a slow and steady grower. Its five-year earnings and sales growth rates are 4% and 3%, respectively. It has a five-year Earnings Stability Factor of 3, indicating a highly steady stream of profits. The U.S. government is its biggest customer. Last year, 82% of net sales came from the government. Analysts polled by Thomson Reuters see profit rising 12% this year and 2% in 2014. Both were recently revised higher.

Lockheed Martin's stock went through a rough patch early in the year, but has been on a tear since. Shares bolted 40% past a 93.67 buy point from a cup-with-handle base in late March before easing recently. The stock managed a small gain Tuesday, despite the budget-related closing of many government agencies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas

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