Will Lockheed Martin Corporation (NYSE: LMT) Keep Rising under Trump?

January 24, 2018, 14:51 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Lockheed Martin Corporation (NYSE: LMT) is one of the big three US defense contractors, which is positioned to benefit greatly from increased defense spending by the Trump administration. The company also has an established reputation as an ideal stock for dividend growth investors given that it has raised its dividend for the past ten years in a row and it also boasts of an average yield of 2.4%.

Article Summary

Lockheed Martin is well positioned to benefit from increased defense spending under Trump.

The company is a reliable dividend growth stock with a sustainable dividend payout.

The company is a major US employer and is favored by Congress.

Here’s the trading report on LMT.

Given that President Trump has approved the Department of Defense budget in 2018 to reach $631.5 billion from 2017’s $543 billion, LMT is likely to get a significant portion of the bigger defense budget. The company has numerous strategic partnerships with the DOD, which allow it to win major defense contracts, while even getting paid when test projects fail.

LMT has a major operating advantage in that it has employees in all 50 U.S. States, which makes it quite easy for the company to win congressional approval for most of its projects. As a job creator in most congressional districts, LMT fits perfectly into President Trump’s ‘America First’ policy, which seeks to encourage American companies to manufacture their products within the country in order to create jobs.

The company faces stiff competition from the other 2 big defense contractors, which are Boeing Co (NYSE: BA) and Northrop Grumman Corporation (NYSE: NOC), as well as smaller companies such as Raytheon Company (NYSE: RTN). Vice President Mike Pence is encouraging the top three defense contractors to collaborate on the government’s plan to lead again in the space race, with the smaller companies providing support.

Lockheed Martin has a significant footprint across the United States, which makes it highly unlikely that the company will perform poorly under the Trump administration. The existing geopolitical tensions between the US and pariah states such as Iran and North Korea are also likely to increase demand for LMT products in the homeland as well as among U.S, allies.

Therefore, the existing factors that favor LMT’s future performance include the Trump administration’s policies as well as the geopolitical tensions. LMT is also a major US employer and as such is likely to obtain congressional approval for its projects.

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