Acquisition LMT

Lockheed Martin Corp LogoWell, even with PSA and TRV acquisitions last month I still had some free cash available from the recent Reynolds American (RAI) acquisition of Lorillard (LO). I continue to save and invest the difference, simple as that. I had about $650 in my brokerage account, so I just simply added $350 extra to make this months acquisition. That is really a great thing when you have the cash flow always rushing into the brokerage in forms of dividends and from mergers, which makes my job of investing much more easier. But anyways, I decided to go with one of my biggest unrealized gain stocks I currently hold. In terms of price growth, it has been a monster gaining over 78% in unrealized gains since initial buy in May of 2013. And in terms of dividends, it has been doing even better, returning cash to shareholders quite aggressively by raising dividend in 2013 by 15.2% and in 2014 by 14.9%. Also, the recent dividend payout from LMT makes it the fourth consecutive quarter of unchanged dividend payouts, which you know what that means, dividend raise is coming up.

Founded in 1995, Lockheed Martin Corporation is a global American aerospace, defense, security, and advanced technologies company. It is engaged in research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. Lockheed Martin operates in five business segments. These comprise of Aeronautics (F-35 fighter jets), Information Systems & Global Solutions, Missiles, Fire Control, Mission Systems, Training, and Space Systems. The company is one of the worlds premier and largest defense contractors with much of its revenue coming from military sales.

  • Dividend Yield: 3.2%
  • 3Yr Dividend Growth Rate: 19.1%
  • 5Yr Dividend Growth Rate: 18.6%
  • Payout Ratio: 53.8%
  • P/E: 17.0
  • Consecutive Years of Dividend Raises: 12

I purchased 5 shares of LMT for the price of $187.40 adding $30.00 to my annual dividend income.

This is the 7th time I am initiating a stock acquisition this year. This transaction is my additional purchase of LMT shares into the portfolio. I now hold 15 shares of LMT. Currently, LMT ownership stake represents to be around 4.5% of my current portfolio value.

The 12-month dividend income increased to $2,399.

Thank you for reading & have a great day!

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11 Comments

  1. FerdiS on July 9, 2015 at 00:45

    Nice buy, DividendVet — I have LMT in another portfolio and its returned 35% since Jan 2014. Nice. Great that you’re starting to experience vividly the benefits of incoming dividend checks! Keep up the good work and take care…

    FerdiS

    • DividendVet on July 9, 2015 at 10:54

      Thanks, LMT has been delivering great result for shareholders for a while now. This is one of the reasons I bought more shares. The price and dividend growth is a great one two punch, although the recent price drop brings great opportunity to buy here.

      Take care.

  2. Jc on July 10, 2015 at 00:09

    Nice buy DV! I completely missed the boat on LMT a few years back when it was yielding something like 4-5%. That’s a lot of dividend growth and capital gains that I missed out on. I’ll have to look into LMT because I don’t own any of the defense companies and LMT seems to be the best one. Plus, unfortunately, I don’t really see demand for their R&D going anywhere anytime soon.

    • DividendVet on July 10, 2015 at 15:46

      I am glad you like it. It is a wonderful thing to have when there are so many great companies out there to invest and you miss one or two, or kind of forget about a few of them. You gotta keep an eye for these type of aggressive companies since they are silent price and dividend growth machines.

      Cheers!

  3. Dividend for Starters on July 13, 2015 at 10:10

    Thanks for sharing DividendVet.

    I added it to my watchlist. Growth numbers and valuation numbers are looking very attractive, however, current price seems a bit high. It has increased more than 6% after you bought it, just a couple of days ago. Nice timing. 🙂

    Best wishes, DfS

    • DividendVet on July 13, 2015 at 14:28

      I wish I could boast that I timed the purchase of LMT just perfectly, but the truth of the matter is that it was just the luck of the draw. No one can time the market and I just randomly picked the day to buy which I thought the shares of LMT are trading at reasonable price.

      As for the fundamentals of the company, I think they are really superb giving dividend growth investors really great one two punch of price and dividend growth over time.

      Best wishes for you too my friend!

  4. DivGuy on July 14, 2015 at 15:30

    LMT seems overvalued to me, but it is a great stock! The stock increase in the last 5 years is incredible.

    Cheers,

    Mike

    • DividendVet on July 14, 2015 at 20:30

      The purchase of LMT definitely wasn’t at the lowest historical valuation levels, but I think I got it at a fair price. Quality of a company doesn’t come cheap these days, especially for such a robust dividend grower. Expectations are high, lets see if it will keep on delivering it to the shareholders.

      Thanks for your thoughts.

  5. Dividend Diplomats on July 20, 2015 at 14:48

    Great pickup here. This is one of Lanny’s best purchases and highest YOC’s. I wish I could have jumped on the LMT train myself a few years ago, then I may have similar unrealized gains haha With a company like this, you can’t really go wrong. They are still undervalued compared to the market and the metrics look great. Nice job adding some rock solid dividend income to your portfolio!

    Bert, One of the Dividend Diplomats

    • DividendVet on July 20, 2015 at 20:10

      Thank you. Indeed it has been a great purchase these last few years and so lets hope the company keeps on doing what it has been doing. (Winning)

      Glad you mentioned yield on costs metric, as I think it is a great measurement to see how your dividend yield is growing over time based on the price you paid for the company shares. Dividend raises help tremendously! My favorite metric too.

      Great to hear Lanny’s similar story with LMT!

      Thanks for stopping by.

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