Lockheed Returns Shareholder Wealth - Analyst Blog
September 27 2013 - 5:00PM
Zacks
Lockheed Martin Corp. (LMT) has increased its
quarterly dividend to $1.33 per share and has authorized the
purchase of up to an additional $3 billion of its common stock
under the share repurchase program. This move reflects the
company’s strong performance and program execution capability.
Lockheed Martin has increased the quarterly dividend by 18 cents
from the current payout of approximately $1.15 per share. The
proposed hike would bring the annual dividend to $5.32, up
approximately 15.7% from the previous payout. The increased
quarterly dividend will be paid on Dec 27, 2013 to shareholders of
record at the close of business on Dec 2, 2013.
With the current annual dividend rate of $5.32 and the current
price of $92.46 (as of Sep 26, 2013), the company has a dividend
yield of approximately 4.1%.
This is the eleventh consecutive annual double-digit increase in
the company’s dividend. In Sep 2012, the company had increased its
quarterly dividend by 15% or 15 cents per share from $1.00 per
share to approximately $1.15 per share.
As per the new share repurchase program, the company is permitted
to repurchase up to an additional $3.0 billion of the company’s
common stock. The program does not have an expiration date. In Sep
2011, the company had last increased its share buyback
authorization. The company was then authorized to purchase up to an
additional $2.5 billion of its common stock under the share
repurchase program.
Lockheed continues to be a strong cash generator with its operating
cash flow reaching approximately $2.7 billion during the second
quarter. The company ended the second quarter with cash and cash
equivalents of $2.8 billion and total long-term debt of
approximately $6.1 billion (including current portion of the
long-term debt), which fell from $6.2 billion at year-end 2012.
This helps Lockheed to return a substantial portion of free cash
flow to its shareholders through share repurchases and incremental
dividends.
In the second quarter of 2013, the company repurchased 4.5 million
shares at a cost of $465 million and disbursed $371 million as
dividends. As of Jun 30, 2013, the company had repurchased 63.8
million shares for a total cost of $5.1 billion. The company has
another $1.4 billion remaining under the current repurchase
program.
Going forward, shareholder return will continue to be shored up by
the company’s focus on debt repayment, its ongoing share repurchase
program and the incremental dividend, which would keep the stock
attractive for shareholders. Meanwhile, the steady flow of
contracts for Lockheed would add to the top line of the company.
The company presently retains a short-term Zacks Rank #2 (Buy).
Other stocks worth considering in the space are Northrop
Grumman Corp. (NOC), Elbit Systems Ltd.
(ESLT) and Alliant Techsystems Inc. (ATK). While
Alliant Techsystems carries a Zacks Rank #1 (Strong Buy), Northrop
Grumman and Elbit Systems hold a Zacks Rank #2 (Buy).
ALLIANT TECHSYS (ATK): Free Stock Analysis Report
ELBIT SYSTEMS (ESLT): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
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