Buy, Hold, or Sell? A Defense Giant With a Record $194B Backlog
2.27% Dividend Yield, 23 Years of Dividend Hikes
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This is the kind of business that sits at the center of modern military power â building fighter jets, missile systems, submarines, and space technologies that governments rely on for decades.
What makes it especially powerful is the structure behind it. Multi-year contracts, funded budgets, and a massive backlog create a level of visibility most industrial companies simply donât have.
That backlog acts like a revenue conveyor belt â smoothing volatility, reducing risk, and allowing the company to plan dividends, investments, and returns years ahead.
When demand for advanced defense capabilities keeps rising â and the customer is willing to pay for proven execution â earnings start to behave like a long-term compounding machine.
âď¸ Lockheed Martin (LMT)
Financial Score: 98 / 99
Lockheed Martin is a global security and aerospace company headquartered in Bethesda, Maryland, operating across four core segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
The company primarily serves the U.S. Department of Defense and allied governments, delivering everything from F-35 fighter jets and hypersonic weapons to missile defense systems and space platforms.
This isnât a short-cycle business. These are multi-decade programs â and Lockheed sits at the center of many of the Pentagonâs highest-priority capabilities.
That matters. The story here isnât just growth â itâs visibility, scale, and execution in one of the most strategically important industries in the world.
đ° Dividend discipline: steady, growing, and well-supported
Lockheed Martin pays $13.80 per share annually, translating into a 2.27% dividend yield. Not flashy â but very solid for a company with this level of quality.
The payout ratio sits at 62.12%, which is a sweet spot: high enough to deliver meaningful income, but with enough room to keep growing without pressure.
The company has increased its dividend for 23 consecutive years, with +36.00% growth over the past five years.
That track record tells you this isnât an afterthought â itâs a core part of capital allocation.
What makes it even stronger is the business model behind it. Defense revenues can be lumpy at the program level, but the backlog smooths that out â allowing management to raise the dividend consistently while still investing in R&D and share buybacks.
This isnât about chasing yield. Itâs about total return â with a reliable check every quarter.
đ Q4 2025: growth across the board, backlog at record levels
For Q4 2025 (reported January 28, 2026), Lockheed Martin reported sales of $20.3 billion, up from $18.6 billion a year earlier.
Net earnings came in at $1.4 billion, or $5.80 per share, with segment operating profit of $2.1 billion at a 10.1% margin. Free cash flow was strong at $2.8 billion for the quarter.
Thatâs the key takeaway: growth is solid, margins are healthy, and cash generation remains strong.
For the full year 2025, sales increased 6% to $75.0 billion, net earnings reached $5.0 billion ($21.49 per share), and backlog climbed to a record $194 billion â up 17% year over year.
âď¸ Growth levers: scale, backlog, and global demand
Lockheed delivered a record 191 F-35 fighters in 2025, significantly above previous highs, helping drive Aeronautics revenue to $30.3 billion.
The backlog reached $194 billion â about 2.5Ă annual sales â providing a multi-year revenue runway across all segments.
Missiles and Fire Control grew 14% to $14.5 billion, driven by hypersonics and rising international demand. Space revenue grew 4% to $13 billion, reinforcing the companyâs position in next-generation defense and space systems.
đ°ď¸ Fun fact â stealth started in complete secrecy
Lockheed Martinâs Skunk Works developed the F-117 Nighthawk, the first operational stealth aircraft, which flew its first classified mission in 1983.
Early pilots reportedly didnât even know what they were flying â the program was that secret. That project laid the foundation for modern stealth aviation, including todayâs F-35 program.
âď¸ Final take â elite quality with a backlog moat
Lockheed Martin combines a 2.27% yield, a $13.80 annual dividend, a 62.12% payout ratio, 23 years of dividend growth, and +36.00% growth over the past five years.
The latest results showed $20.3 billion in quarterly sales, $1.4 billion in net earnings, $2.1 billion in operating profit, and strong free cash flow. Full-year 2025 delivered $75.0 billion in sales and a record $194 billion backlog.
With a Financial Score of 98, this is top-tier quality â the kind of company that sits in the âeliteâ category.
But even here, there are risks:
program delays or execution issues
margin pressure on complex, high-tech platforms
supply chain constraints
â Buy / Hold / Sell?
We already know the answer. But we donât make that call based on headlines or a single metric. Every company we cover goes through:
our 5-step secret formula;
the MaxDividends Income System framework;
and Valuation check.
Thatâs where the real decision is made.
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