Is Lockheed Martin Corporation (LMT) a Good Stock to Buy?

Raytheon recently raised its dividend 10% and the stock now yields 3.3%, while Northrop Grumman recently bumped up its payout by 11% and provides new investors with a 3% yield at recent prices.

While Raytheon and Northrop Grumman are solid dividend growth stocks, Lockheed Martin Corporation (NYSE:LMT) does its investors even better with a significantly stronger payout and better dividend growth. Despite fear of budget cuts, Lockheed Martin Corporation (NYSE:LMT) maintains a dividend growth policy that is hard to contend with. The company has increased its dividend by 22% compounded annually over the past five years. Lockheed Martin Corporation (NYSE:LMT)’s current payout yields 4.3%, a compelling yield in today’s climate of historically low interest rates.

It remains to be seen how severe an impact sequestration will have on the defense industry. Only time will tell if the possible budget cuts will be as harsh as some predict. For the time being at least, the defense industry is business as usual. In particular, Lockheed Martin is executing extremely well in its long-held goal of generating free cash flow and returning it to shareholders. The stock provides fantastic dividend growth, a high current yield, and a highly profitable business, and in my opinion, is a good stock to buy and hold for many years.

Robert Ciura owns shares of Lockheed Martin. The Motley Fool owns shares of Lockheed Martin, Northrop Grumman, and Raytheon Company.

The article Is Lockheed Martin a Good Stock to Buy? originally appeared on Fool.com.

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