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Lockheed Martin Sweetens Payout For Shareholders

By: Investor's Business Daily
Posted: 10/1/2013 5:29:00 PM
Referenced Stocks: LMT

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.