Lockheed Martin and Others Present Solid Dividend Opportunities

Lockheed Martin's stock sell-off may represent a buying opportunity for dividend-seeking investors. The company maintains a strong dividend payout alongside American Water Works and Watsco, who also demonstrate resilient earnings growth.

Date: 05-04-2025

AI Rating: 7

Investment Analysis of Lockheed Martin and Competitors

The report highlights several key factors that could affect stock prices for Lockheed Martin (NYSE: LMT), American Water Works (NYSE: AWK), and Watsco (NYSE: WSO). Notably, Lockheed Martin's recent sell-off is viewed as a favorable entry point for investors due to its strong history of reliable dividends.

Earnings Per Share (EPS)
Lockheed Martin's EPS has doubled over the last decade, attributed largely to aggressive share buybacks that have decreased the total share count. This strategy can enhance earnings per share during periods of weak overall earnings, presenting a more favorable valuation for investors. The expectation of stable earnings and increased EPS due to buybacks could support a price recovery, enhancing the stock's appeal despite recent challenges.

Dividend Growth
Lockheed Martin has maintained a robust dividend increase record, boasting 22 consecutive years of hikes, with a yield now around 3%. The company's payout ratio of 57% indicates a commitment to returns, even amid weak earnings. This structure provides insulation against economic uncertainty and may attract income-focused investors.

American Water Works is another strong candidate for investors looking at dividends, with an annual growth rate of 8.9% for dividends over the last five years and a targeted earnings growth rate of 7% to 9%. The company’s strong regulated business model supports consistent cash flows and provides a clear path for sustainable dividend growth.

Watsco is portrayed as a relentless grower of both earnings and dividends, with a strong historical outperformance of the S&P 500, further reinforcing its attractiveness. The combination of acquisition-driven growth and increased market share in the HVACR industry supports its ongoing revenue and earnings expansion.

In conclusion, while Lockheed Martin faces challenges, its dividend resilience paired with strategic buybacks makes it worth considering for income-seeking investors. American Water Works and Watsco also present compelling cases due to their strong revenue streams and solid dividend growth potential.

Stocks: LMT AWK WSO