Credit: Shutterstock photoLockheed Martin ( LMT ) hit an all-time high Tuesday after an analyst upgraded from hold to buy the stock and set a price target of 220.
The stock closed up nearly 1% in above-average volume.
Stifel Nicolaus analyst Joseph DeNardi said he believes the company will grow its share buyback program and dividends over the next several years.
"We believe the cash generation outlook for Lockheed's core business, combined with the expected cash recovery from its pension, over the next several years should support continued growth in the company's dividend and share repurchase activity to a degree that will differentiate it from its peers."
He said he expects defense spending to bottom in 2015 and predicts solid growth in sales of F-35 jet fighters. He sees Lockheed as the best way to play more stable defense budgets.
Although growth has slowed from a decade ago, Lockheed still offers steady growth. Over the last 13 years covering both Republican and Democratic administrations, the company has grown earnings every year except two, when growth was flat. The five-year annualized EPS growth rate is 7%. Analysts predict 12% growth this year and 7% next year.
The five-year Earnings Stability Factor is an impressive 4 on a 0 to 99 scale where low numbers correspond to stable earnings growth.
The Aerospace/Defense industry group is ranked No. 73 out of 197 groups, but has moved up from No. 126 just seven weeks ago.
Lockheed is ranked No. 7 by Composite Rating out of 56 companies in the group.
Lockheed most recently raised its quarterly dividend Sept. 25 from $1.33 to $1.50. It will be payable Dec. 26 to shareholders of record Dec. 1. Its new dividend equates to an annualized rate of 3.3%.
Its five-year annualized dividend growth rate is 21%. In 2000, the quarterly dividend was just 11 cents.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
