Lockheed Martin Corporation (NYSE: LMT) today announced its quarterly dividend will increase by 20% to 42 cents per share. This is the sixth increase in the company’s quarterly dividend since 2003. The dividend is payable Dec. 28, 2007 to holders of record on Dec. 3, 2007.
With this announcement, the dividend rate of the company has gone from $0.12/ quarter to $0.42/quarter over the past 4 years. This substantial dividend growth rate, of nearly 24% over the past 5 years, is certainly worthy of further investigation.
The company also announced its Board of Directors has authorized the repurchase of an additional 20 million shares under its share repurchase program. The share repurchase program was initiated in October 2002. Through June 30, 2007, the company had repurchased a total of 88.1 million shares, out of the prior share authorization of 108 million shares.
In the first six months of 2007, Lockheed Martin repurchased 14.4 million shares. As of June 30, 2007, approximately 412 million shares of common stock were outstanding on the company’s balance sheet. Shares may be purchased in the open market or in privately negotiated transactions.
We have previously discussed, at length, about who benefits from stock repurchase programs and how a company can create shareholder value, this makes Lockheed’s repurchase and dividend growth numbers are fairly intriguing.
In addition, Lockheed’s dividend payout ratio at 20.25% is below that of the industry, leaving room for reinvestment into the company in order to fund future growth.
Speaking of growth, Lockheed Martin has grown its earnings per share at an astounding 125 % over the past 5 years. Couple that with a return on equity of 38.15 versus the S&P 500 average ROE of 21.5, and it looks like Lockheed is destined for even more growth.
Disclosure: The author does not own shares of LMT.