How Lockheed Martin’s Dividend Yield Looks



Net sales and EPS performance in 2015 and 2016

Lockheed Martin (LMT) is a worldwide security and aerospace company. The company reported growth of 17% in 2016 net sales after 1% growth in 2015 net sales. Products and services drove the growth. Aeronautics, rotary, and mission systems and space systems drove the growth, offset by missiles and fire control.

Gross profit rose 13% in 2016 after sliding by 4% in 2015. The company’s operating profit rose 18% in 2016 after a 6% decline in 2015. This rise was due to growth in other income in 2016 after a decline in 2015. All of these factors translated into 53% EPS growth in 2016 after a 2% increase in 2015. Interest expense has risen over the years. The share buybacks further enhanced the EPS numbers.

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Net sales and EPS performance in 1H17

Lockheed Martin noted 8% net sales growth in 1H17 offset by higher costs. All of the company’s segments drove the company’s 11% increase in gross profit. Operating income rose 4% due to lower other income. The company’s EPS fell 6% in 2016 compared to 2015. The 2015 EPS was enhanced by earnings from discontinued operations.

Dividend yield

The company has increased its dividend. However, the dividend yield fell to 2.3% as prices have risen 27.8% on a YTD basis. In comparison, the Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.3% and YTD price gains of 15.7%. The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.3% and YTD price gains of 14%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 22.7%. Lockheed Martin has maintained an adequate free cash flow balance to honor its dividend obligations since 2013.

The iShares Select Dividend ETF (DVY) offers a 3% dividend yield at a PE of 20.3x. Franklin LibertyQ Global Dividend ETF (FLQD) offers a 3.5% dividend yield at a PE of 18x.


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