Summary
- Lockheed Martin has become a new holding in my personal portfolio.
- The stock meets my fundamental criteria and the corporate narrative is favorable. I believe the management team is solid and shareholder-friendly.
- The stock looks inexpensive versus my Fair Value Estimate.
- Lockheed has the makings of a strong dividend growth, capital appreciation story. The current forward yield is 3.1 percent.
For those who follow my work on Seeking Alpha, you already know I am a long-term investor. Typically, I hold investment positions for years. In addition, I limit my personal portfolio to a limited number of stocks; typically not more than 12 to 15 core positions.
Therefore, beginning to accumulate shares in a new stock is an infrequent occurrence.
Recently, I began to purchase shares in Lockheed Martin Corporation (LMT), the world’s largest developer and producer of defense, security, and intelligence products.
In this article, I will provide you with my investment thesis for owning the stock, then offer information supporting the thesis. This may become the framework for your own due diligence.
Lockheed Martin Investment Thesis
I believe Lockheed Martin is likely to be a solid investment for long-term investors seeking both growing income and capital appreciation. The business is well-managed, owns a strong franchise, possesses a sound balance sheet, earns its profits in cash, and is shareholder-friendly.
Using routine valuation methodologies, shares appear inexpensive.
For at least two decades, Lockheed has, on average, grown operating earnings by ~10% a year. Neither recessions nor changing political administrations made much of a difference. Indeed, current events indicate little threat to the general business model or financial trajectory of the corporation.
The dividend has been increased for 20 consecutive years. Today, the stock yields 3.1 percent. In recent years, the payout has risen smartly, and it’s materially higher than other large Aerospace and Defense stocks.
