Lockheed Martin Boosts Profits with Dividend and Buyback Plans

Lockheed Martin Increases Dividend and Buyback Authorization

Lockheed Martin Corp. (NYSE: LMT) has announced a significant milestone as its board of directors has approved a remarkable 4.8% increase in its quarterly dividend, now set at $3.30 per share. This marks an impressive 22 consecutive years of dividend hikes, highlighting the company’s commitment to returning value to its shareholders. The updated dividend will be effective from December 27, ensuring that shareholders who are on record by December 2 will benefit from this increase.

The total annualized dividend now stands at $13.20, providing a solid dividend yield of 2.08%. This yield surpasses the average yield of 1.24% for the broader S&P 500 index, making it a desirable option for income-focused investors.

In addition to the increased dividends, Lockheed Martin’s management is also dedicated to enhancing shareholder value through share repurchases. The company’s board has authorized an additional $3 billion for repurchases, leading to an impressive total program authorization nearing $10 billion. This initiative showcases Lockheed's robust strategy aimed at increasing shareholder returns further.

Can Lockheed Continue Its Dividend Hikes?

Lockheed Martin's platform-centric focus and strategic positioning across various military branches, including the Army, Air Force, and Navy, facilitate a reliable stream of follow-on orders. The company has successfully secured significant defense contracts from both the U.S. government and international allies. By the end of the second quarter, Lockheed reported a record backlog of $158.3 billion, supported by the rising global demand for defense solutions, promising strong sales growth and cash flow in upcoming reporting periods.

Moreover, Lockheed’s international reach provides additional support for its revenues. In the second quarter, 25.8% of total net sales were attributed to international clients, underscoring the company’s efforts to expand its global footprint.

As the largest U.S. defense contractor, Lockheed is well-positioned for sustained growth, especially with its critical F-35 program, which is expected to continue actively for many years, as the U.S. government's target remains at 2,456 aircraft across the Air Force, Marine Corps, and Navy. This ongoing demand significantly bolsters the company’s financial performance and supports future earnings.

Thanks to its global presence, substantial backlog, and successful contract acquisitions, Lockheed generates noteworthy operating cash flow, assuring that it can maintain its shareholder-friendly initiatives well into the future.

Recent Dividend Hikes by Other Aerospace Companies

A number of other defense contractors are also enhancing shareholder returns through dividend increases. For instance, on May 14, 2024, Northrop Grumman Corp. (NYSE: NOC) announced a notable 10% increase in its quarterly dividend, bringing it to $2.06 per share, marking the 21st consecutive annual hike. The long-term earnings growth rate for Northrop stands at an impressive 8.7%, with expectations for sales growth of 5.4% in 2024.

Moreover, on May 10, 2024, Curtiss-Wright (NYSE: CW) declared a 5% increase in its quarterly dividend to 21 cents per share and authorized an additional $300 million for repurchases, enhancing total authorizations to $400 million. The firm boasts an impressive average earnings surprise of 11.52% over the past four quarters and anticipates a 7.1% increase in sales for 2024.

On May 2, 2024, RTX Technologies (NYSE: RTX) announced a 6.8% increase in its dividend, bringing it to 63 cents per share, reflecting its commitment to rewarding shareholders and showing strong growth potential with a long-term earnings growth rate of 10.4%.

LMT Stock Price Movement

Over the past three months, shares of Lockheed Martin (LMT) have surged 31.1%, outperforming its industry peers, which have seen an average increase of 12.2%. This substantial growth highlights investor confidence in Lockheed's strategic initiatives and execution.

LMT's Current Market Standing

As of now, Lockheed Martin holds a favorable market position with a Zacks Rank of #2, indicating a Buy rating. This positive outlook makes LMT an attractive option for investors seeking exposure to the defense sector.

Frequently Asked Questions

What is the new quarterly dividend announced by Lockheed Martin?

The newly announced quarterly dividend is set at $3.30 per share, representing a 4.8% increase.

How much has Lockheed Martin allocated for share repurchases?

Lockheed Martin has authorized an additional $3 billion for share repurchases, leading to nearly $10 billion in total authorization under the program.

What percentage of Lockheed's sales come from international customers?

In the second quarter of 2024, 25.8% of Lockheed Martin's total net sales were derived from international customers.

How has Lockheed Martin's stock performed recently?

In the last three months, Lockheed Martin's stock has increased by 31.1%, outperforming its industry average of 12.2%.

What is Lockheed's Zacks Rank?

Lockheed Martin currently holds a Zacks Rank of #2, indicating a Buy rating which reflects strong investor interest and market confidence.

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