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Lockheed Martin (LMT) Dividend Stock Analysis

by | Dividend Contenders

Lockheed Martin Dividend

(updated 12/08/2017)

The Lockheed Martin dividend has been paid continuously since 2000 and increased for 14 consecutive years;
qualifying the company as a Dividend Contender.

Price: $315.96
Current Dividend: $8.00

Dividend Yield: 2.5%
Cash Dividend Payout Ratio: 46%

Market Capitalization: 91 B
Enterprise Value:  102  B

Description

Sector: Industrials
Industry: Aerospace & Defense

Lockhheed Martin is the world’s largest defense contractor with approximately 46 billion dollars in revenue for 2016. Sixty percent of revenue is received from the U.S. Department of Defense, 20% from other U.S. Government agencies, and 20% foreign militaries.

The company operates in four segments: Aeronautics accounts for nearly 40% of revenues, mission systems (combat ships and naval electronics, helicopters, etc.) 30%, space systems and missiles and fire control account for the remaining 30%.

SWOT Analysis

Strengths

The world is a very dangerous place, and there is growing recognition among the populace and Congress that increased resources are needed to meet our needs. The Iraq and Afghanistan wars have left the military with high replacement and refresh needs.

Lockheed Martin is well positioned to provide the research, layout, manufacture, products, improvements, and service for systems required by the military industrial complex.

Weaknesses

Working with government entities is never easy or efficient. Companies find themselves at the mercy of government with obstacles such as excessive red tape, prohibitive regulation, and constantly changing budgets. This makes the long term planning required for major systems challenging.

Opportunities

Long term experience working with governments, and near monopolies (or at least duopolies) in most of their product lines, provide unique benefits to LMT. In other words, their main weakness becomes an opportunity because so few companies can do what Lockheed Martin does so well.

Threats

Austerity in military budgets in general keep growth rates at extremely low levels. Revenue has grown at a snails pace of 2% annually the past 10 years. In the U.S., budget sequestration has cut billions from key projects. Any long periods marked by declining global conflict (which we all hope for) could bring even more drastic cuts to military spending.

Dividend Analyzer Checklist

                    (updated November 2017)

Dividend Safety Score (20/33 points)

Dividend Payout Ratio (ttm): 58%
Cash Dividend Payout Ratio (ttm): 46%  (8/12 points)
Dividend Per Share (ttm):  $7.28
Cash From Operations (CFO) Per Share (ttm): $19.49
Free Cash Flow (FCF) Per Share (ttm): $15.71
Net Financial Debt: $11327 M
Total Assets: $48711 M
Net Financial Debt / Total Assets: 23% (7/12 points)
Net Financial Debt to EBITDA (ttm): 214%
Piotroski Score (1-9) (TTM): (5/9 points)

 

Profitability Score (9/33 points)

Operating Earnings Yield (ttm): 6.0%  (6/15 points)
Net Income (ttm): $5088 M
Gross Profit (ttm): $5314 M
Total Assets: $48711 M
Gross Profitability Ratio = GP / Total Assets: 11% (3/18 points)
Cash Return On Invested Capital (CROIC)(tttm): 25%
Return on Invested Capital (ROIC): 31%

Valuation Score (16/34 points)

Free Cash Flow Yield (ttm): 5.1% (11/17 points)
EV to EBIT (ttm): 18.2
EV to EBITDA (ttm): 15.0  (5/17 points)
Price to Sales Ratio (ttm): 1.8
Price to Book Value (ttm):  42.1
Price to Earnings Ratio (P/E) (ttm):  25
PE 10: 33

TOTAL POINTS – (45/100) (50 is an average score)

Earning Report: 10/25/17

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Conclusion

(updated November 2017)

Lockheed Martin is ranked #218 (out of 377) overall and #52 (out of 86) in the Industrial Sector by the Dividend Analyzer.

Type of Investor / Recommendation

Large Diversified Dividend Portfolios / Watchlist
Looking For Exposure to Industrial Sector / Avoid
Deep Value Investors / Avoid

Portfolio Position Disclosures:
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Disclaimer: While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.
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