LMT - Is Lockheed Martin Losing Steam As A Dividend Growth Stock?
2024-06-21 12:28:28 ET
Summary
- Lockheed Martin Corp.'s dividend growth rate has been declining for years, prompting a critical review of its suitability as a dividend growth stock.
- Low single-digit sales growth and stagnant free cash flow make a further slowdown in dividend growth seem likely, but a closer look shows otherwise.
- I firmly believe that LMT stock continues to be a solid dividend growth investment.
- To support my position, I take a look at Lockheed's growth prospects, capital expenditures, unfunded pension liabilities, and debt service capacity.
Introduction
It's been quite a while since I last covered Lockheed Martin Corporation ( LMT ) stock. When I wrote my last article outlining my reasons for adding Northrop Grumman Corporation ( NOC ) to my portfolio, I thought it was a good time to review all of my defense holdings. In the case of LMT, it is the declining dividend growth that prompted me to prioritize the review.
Lockheed's ten- and five-year average dividend growth is 9.0% and 7.4%, respectively (Figure 1), indicating a longer-term trend that was confirmed by the last increase of just 5.0%. I don't want to be misunderstood that I am generally unhappy with Lockheed's dividend growth, but I think a closer look at some aspects is warranted to assess whether the company can maintain mid-single-digit dividend growth (or better) going forward....
Is Lockheed Martin Losing Steam As A Dividend Growth Stock?