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Why Lockheed Martin (LMT) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Lockheed Martin in Focus
Based in Bethesda, Lockheed Martin (LMT - Free Report) is in the Aerospace sector, and so far this year, shares have seen a price change of 7.03%. Currently paying a dividend of $2.6 per share, the company has a dividend yield of 2.74%. In comparison, the Aerospace - Defense industry's yield is 0.12%, while the S&P 500's yield is 1.34%.
In terms of dividend growth, the company's current annualized dividend of $10.40 is up 6.1% from last year. Lockheed Martin has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.56%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Lockheed's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, LMT expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $26.74 per share, representing a year-over-year earnings growth rate of 9.14%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that LMT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Lockheed Martin (LMT) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Lockheed Martin in Focus
Based in Bethesda, Lockheed Martin (LMT - Free Report) is in the Aerospace sector, and so far this year, shares have seen a price change of 7.03%. Currently paying a dividend of $2.6 per share, the company has a dividend yield of 2.74%. In comparison, the Aerospace - Defense industry's yield is 0.12%, while the S&P 500's yield is 1.34%.
In terms of dividend growth, the company's current annualized dividend of $10.40 is up 6.1% from last year. Lockheed Martin has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.56%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Lockheed's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, LMT expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $26.74 per share, representing a year-over-year earnings growth rate of 9.14%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that LMT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).