Start the conversation
Lockheed Martin stock is Money Morning's Pick of the Week.
One of the primary U.S. defense contractors, Lockheed Martin Corp. (NYSE: LMT) is a stock that can serve as a counterweight to the current market volatility.
Two of Money Morning's experts, Chief Investment Strategist Keith Fitz-Gerald and Technical Trading Specialist D.R. Barton Jr., have recommended LMT stock recently.
Lockheed Martin: About the Company
Lockheed Martin has an incredibly rich history. It traces its origins to the Glenn L. Martin Company and Lockheed Aircraft Company, both founded in 1912. The Glenn L. Martin Company found success with the MB-1 biplane bomber in World War I and the B-26 Marauder during World War II. Martin also built the Titan and Atlas series of booster rockets, as well as the Viking Mars probes, for the National Aeronautics and Space Administration (NASA). It merged with American-Marietta in 1961 to form Martin Marietta Corp. Meanwhile, Lockheed made a name for itself early in building civilian aircraft, such as the Model 10 Electra flown by Amelia Earhart. Lockheed switched to military production for World War II and developed the P-38 Lightning fighter. During the war, Lockheed also created its secretive "Skunk Works," which created the P-80 Shooting Star (an early jet) as well as the U-2 and SR-71 Blackbird spy planes, and more recently the F-117 Nighthawk stealth fighter. Martin Marietta and Lockheed merged in 1995 to become Lockheed Martin. Today the company is headquartered in Bethesda, Md., and employs 126,000 people worldwide.
A Lockheed Martin Stock Overview (NYSE: LMT)
Lockheed Martin stock has done consistently well for most of its history, but has had a stunning run over the past three years. Since January 2013, the LMT stock price is up more than 130%. It's held up well over the past six months of market turmoil, too. Since early August, the Lockheed Martin stock price is up nearly 3% while the Standard & Poor's 500 Index is down 12%. With a valuation of about $65 billion, Lockheed Martin is a large-cap stock. LMT stock also has a dividend yield of 3.11%.
But despite the impressive gains, Lockheed Martin stock still has much to offer new investors…
Why LMT Stock Is a Buy
As a mature company, Lockheed Martin stock isn't likely to deliver huge gains. But for the kind of turbulent markets we've seen so far in 2016, LMT stock is ideal. It has a track record of outperforming the market in good times and hanging on to gains in rough times.
One reason for that is the dividend – which Lockheed has raised every year since 2003. And Lockheed doesn't skimp on those increases, either. The $0.12 dividend of 2003 is now $1.65. That's an increase in the payout of 1,275% in 13 years.
"Management has a history of dramatically increasing payouts," Fitz-Gerald said in making his case for Lockheed Martin stock. "Plus, the company is tapped into what I like to call an Unstoppable Trend – War, Terrorism, and Ugliness. That's one of the biggest Unstoppable Trends of all."
And Lockheed has scored some big wins lately.
Last November's $9.1 billion acquisition of military helicopter-maker Sikorsky will add about $7.5 billion in revenue and solidify Lockheed's reputation as America's premier defense contractor.
Also in November, the company announced a $262 million contract with the U.S. Air Force to service Saudi Arabia's F-15 sniper targeting system and radars.
And in late December, Lockheed won a $528 million contract with the Missile Defense Agency to build interceptors for the Terminal High Altitude Area Defense (THAAD) system. THAAD knocks down short- to medium-range ballistic missiles.
This year Lockheed is ramping up production of its F-35 Lightning II fighter – a $400 billion contract for more than 2,400 planes customized for the U.S. Air Force, the U.S. Navy, and the U.S. Marines.
"Lockheed Martin is doing great on the contract side," Barton said, "but they have an ace up their sleeve. Their cybersecurity consulting group is growing and is one of the strongest in the world. That's going to help them get money outside the defense sector."
Investing in Lockheed Martin Stock
When it comes to LMT stock, there's no reason to wait. The stock has sailed virtually untouched through the past three months of volatility – in fact, it's actually up 0.71%. And while this is more of a defensive play (no pun intended), the one-year price target of $234.87 represents a 9% gain from the current price of about $215.50. Add in the 3.1% dividend and you have a stock that will reward you no matter what happens in 2016.
Best Stocks for a Tough Market: Lockheed Martin is just one option for dealing with market volatility. Money Morning's experts have several strategies not just for surviving a down market, but for making money while everyone else is running for the exits. Here are some of our best ideas right now…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.