Lockheed Martin Corporation: A Dividend Stock for Long-Term Investors with Strong Financials and Commitment to Shareholders

Lockheed Martin Corporation (NYSE:LMT) is a defense contractor with long-term agreements for various products. Q2 2025 financial results showed a net profit decline of nearly 80% due to a $950 million loss on a classified program. Despite this, Lockheed Martin expects $6.6 billion in free cash flow for the year and has returned $1.3 billion to investors through dividends in the most recent quarter. The company has raised its payouts for 22 years and offers a quarterly dividend of $3.30 per share with a dividend yield of 3.14%.

Lockheed Martin Corporation (NYSE:LMT), a leading defense contractor, reported its Q2 2025 financial results on July 22, revealing a net profit decline of nearly 80% due to a $950 million loss on a classified program. Despite this setback, the company expects $6.6 billion in free cash flow for the year and has returned $1.3 billion to investors through dividends in the most recent quarter.

During Q2 2025, Lockheed Martin's total sales reached $18 billion, marking a sequential growth driven by improved supply chain and increased capacity for deterrent capabilities. The Aeronautics segment saw a 2% year-over-year (YoY) increase in sales, primarily due to higher F-35 production contracts. Meanwhile, the Missiles and Fire Control segment witnessed an 11% YoY increase, attributed to production ramp-up on various missile programs [1].

The company's net earnings fell to $342 million (US$1.46 per share), down from $1.6 billion (US$6.85 per share) in Q2 2024. Operating cash flow sharply declined to $201 million (AU$308.29 million), while free cash flow turned negative at $150 million (AU$230.1 million) [1].

Lockheed Martin's chairman, president, and CEO, Jim Taiclet, emphasized the company's solid foundation and resilience. He noted that the company's foundation remains strong, with sales growing sequentially, and investments in infrastructure and innovation totaling $800 million (AU$1.2 billion) [1]. The company also returned $1.3 billion (AU$1.99 billion) to shareholders through dividends and share repurchases.

The company secured a $4.29 billion contract modification for missile production by the U.S. Department of Defense and a $578.7 million contract for F-35 air vehicle initial spares, further highlighting its commitment to supporting critical defense programs [2].

Lockheed Martin has a solid track record of growing its dividend, with 22 consecutive years of boosting its payout. At 3.1%, Lockheed has the highest dividend yield among the major defense contractors [3]. The company plans to generate $6.7 billion in free cash flow at the midpoint of guidance, returning around $3 billion to shareholders through buybacks and $3.1 billion through dividends.

References:
[1] https://www.defenceconnect.com.au/air/16526-whats-in-the-box-lockheed-martin-ceo-hints-at-magical-aircraft-despite-us-1-6bn-loss
[2] https://www.investing.com/news/stock-market-news/lockheed-martin-secures-43-billion-missile-contract-modification-93CH-4164613
[3] https://finance.yahoo.com/news/takes-10-000-invested-3-104500517.html