Lockheed Martin Pays $13.80 a Share in Dividends Every Year. Is the Defense Giant Still a Retirement Staple?

Lockheed Martin (NYSE:LMT | LMT Price Prediction) pays an annualized dividend of $13.80 per share, based on a quarterly payout of $3.45. The prior rate was $3.30. At the current price of $619, the yield comes to roughly 2.2%. That figure is already outdated. On its October 22 earnings call, management said the board raised the quarterly dividend by $0.15 to $3.60 per share, the company’s 24th consecutive year of dividend increases.

Two Decades of Raises Retirees Can Count On

The payment history begins at $0.22 a quarter in 1999. It was cut to $0.11 in 2000 and has grown every year since. Recent raises have come each fourth quarter: $3.00 in late 2022, $3.15 in late 2023, $3.30 in late 2024, and $3.45 in late 2025.

The yield is low mostly because the stock has grown. Shares are up 30.31% year to date and 113.54% over five years.

Free Cash Flow Covers the Dividend More Than Twice

Raised Q3 guidance puts 2026 diluted EPS at $30.35 to $30.75. That puts the $13.80 payout at about 45% of guided earnings. Lockheed paid $816 million in cash dividends in Q1. At that pace, the low end of the $7.8 billion to $8.0 billion free cash flow guidance covers the dividend about 2.4 times. The company spent $3.0 billion on buybacks in 2025.

The balance sheet carries more debt than that coverage suggests. Total liabilities were $54.447 billion against shareholders’ equity of $10.063 billion, with $5.96 billion in cash. CFO Evan Scott summed up the company’s priorities:

“Our robust free cash flow supports investment and growth while simultaneously returning value to shareholders, reflected in a 24th consecutive annual dividend increase.”

A $292 Billion Backlog Stands Behind the Dividend.

The backlog reached a record $292 billion, up $113 billion from a year earlier. A $52.5 billion PAC-3 MSE award drove much of the gain. Demand is also coming from Washington: the FY 2027 budget request seeks $52.9 billion for Critical Munitions. CEO Jim Taiclet said:

“The demand for our capabilities, though, is driven by the threat. It has bipartisan support and is not tied to any one bill or election.”

RTX (NYSE:RTX) has a bigger $340 billion backlog, but $176 billion of it is commercial, and its Q3 free cash flow fell 47.35%. Northrop Grumman (NYSE:NOC) has a $109.60 billion backlog and guides free cash flow to just $3.1 billion to $3.5 billion.

F-35 Lot 20 Is the Risk to Track

Lockheed said that F-35 Lot 20 costs now exceed what current contracts allow. Without more government funding, future results will suffer. The company has had cost problems before: Aeronautics recorded $950 million in classified program losses in 2025, and Q1 2026 free cash flow was negative $291 million. Next year could also bring a pension contribution “in excess of $1 billion”. On top of that, fiscal 2027 opened under a continuing resolution.

Why the Dividend Case Still Holds Up

Lockheed’s dividend rests on solid ground. The payout uses less than half of guided earnings, free cash flow covers it more than twice, and the backlog reached a record. Retirees get reliable raises and a lower starting yield. Over the coming months, watch three things: whether Lot 20 gets signed, the pension funding decision, and the cash used to close the Ultra Maritime deal.

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