This Cash-Gushing Dividend Stock Beats the Dow Jones

The Dow Jones Industrial Average (Dow) includes 30 top U.S. firms. It's frequently reported and considered a barometer of the U.S. stock market. Lockheed Martin develops land, marine, air, space, and cyber weaponry. Its Apache and Black Hawk helicopters, F-35 Lightning II fighter, and Javelin mobile missile systems are well-known.

Instead of investing in the US military, Lockheed Martin is a good option. Over 70% of revenues come from the US government. The Defense Department provides much of that. Government expenditure might occasionally decrease, but protecting America and its interests has always been expensive and has only increased.

Check out how dividends have affected you—they're often overlooked. On price alone, Lockheed Martin beat the Dow. Dividends boosted stock returns more than share price growth.

Lockheed Martin still pays a great dividend. For 21 years, the corporation has grown its dividend. In the previous five years, the dividend has climbed 8% yearly. With the stock's 2.7% dividend yield, that's a good long-term combination.

Lockheed Martin's dividend payout ratio is 52%, allowing management to boost it. Repurchasing shares boosts profitability as management employs surplus cash flow.

Lockheed Martin is poised for long-term growth. With almost a quarter of Lockheed Martin's sales, the F-35 fighter program has plenty of life remaining. The Pentagon owns 450 F-35 fighter planes and wants to buy 2,500 more in the next decades. German and Canadian allies are interested in the F-35 despite its delays and cost overruns due to geopolitical sensitivities.

Lockheed's actual profit will come from years of maintenance and repair on these pricey planes. Program value is estimated at $1.7 trillion. Since early 2023, analysts have raised Lockheed Martin's long-term growth estimates:

The stock has a forward P/E ratio of 17, which is reasonable for a firm with 9% profits growth and a roughly 3% dividend yield. Patient investors who let Lockheed Martin multiply its profits and pay dividends might outperform the Dow Jones for years.

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