Concerning its best-in-breed dividend (currently yielding 5.15% at the closing price Friday of $89.99), it does concern me that it represents a 50% payout ratio.
When I factor in that at the beginning of 2013, LMT had total cash of $1.9 billion and operating cash flow (TTM) of $1.56 billion flowing in from its many government and private clients, I'm feeling more secure.
Another name in the aerospace and defense sector I like is Raytheon (RTN) which rose Friday to $56.03 on below average volume. It pays a $2.00 annual dividend, a current yield-to-price of 3.57%.
In comparison to LMT, RTN's dividend represents a payout ratio of only 35% and is backed by over $4 billion in total cash as of the start of 2013.Take a look at its one-year price chart with the year-over-year quarterly retained earnings growth line. RTN data by YCharts
Oddly it looks very different than LMT's, and until we're assured that the quarterly retained earnings growth is heading north again, I'd be cautious about owning the shares of RTN. This is doubly concerning in light of the "sequester" situation. When the "all clear" announcements are made both these stocks could move higher. For dividend-hungry investors, LMT and RTN are worth watching and perhaps accumulating on any corrections. Both are top-notch at what they do and how they are managed. At the time of publication the author had a position in LMT. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV