Lockheed Martin Stock Hands $40 Bil Back – Worth a Look

Lockheed Martin Stock Hands $40 Bil Back - Worth a Look?

In the last five years, Lockheed Martin (LMT) stock has returned $40 Bil back to its shareholders through cold, hard cash via dividends and buybacks. Let's look at some numbers and compare how this payout power stacks up against the market's biggest capital-return machines.

As it turns out, LMT stock has returned the 39th highest amount to shareholders in history.

Why should you care? Because dividends and share repurchases represent direct, tangible returns of capital to shareholders. They also signal management's confidence in the company's financial health and ability to generate sustainable cash flows. And there are more stocks like that. Here is a list of the top 10 companies ranked by total capital returned to shareholders via dividends and stock repurchases.

Top 10 Stocks By Total Shareholder Return

For full ranking, visit Buybacks & Dividends Ranking

What do you notice here? The total capital returned to shareholders as a % of the current market cap appears inversely proportional to growth prospects for reinvestments. Stocks like Meta (META) and Microsoft (MSFT) are growing much faster, in a more predictable way, compared to the others, but they have returned a much lower fraction of their market cap to shareholders.

That's the flip side to high capital returns. Sure, they are attractive, but you have to ask yourself the question: Am I sacrificing growth and sound fundamentals? With that in mind, let's look at some numbers for LMT. (see Buy or Sell Lockheed Martin Stock for more details)

Lockheed Martin Fundamentals

• Revenue Growth: 5.6% LTM and 4.4% last 3-year average.
• Cash Generation: Nearly 9.2% free cash flow margin and 10.3% operating margin LTM.
• Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for LMT was 2.4%.
• Valuation: Lockheed Martin stock trades at a P/E multiple of 29.4

*LTM: Last Twelve Months

The table gives a good overview of what you get from LMT stock, but what about the risk?

LMT Historical Risk

Lockheed Martin isn't immune to big drops either. It fell about 62% during the Dot-Com Bubble and 50% in the Global Financial Crisis. The 2018 correction and Covid pandemic trimmed it by around 30% and 37%, respectively. Even the recent inflation shock knocked nearly 20% off its peak. The stock looks solid in the long run, but these numbers show downturns can hit hard regardless of underlying strength.

But the risk is not limited to major market crashes. Stocks fall even when markets are good - think events like earnings, business updates, and outlook changes. Read LMT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 - the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.