Portfolio Update
The FiveTwenty portfolio received no dividends in the past week.
| Past Week Dividend | $0 |
| Current Quarter Dividend (Q3 2021) | $121.15 |
| LifeTime Dividend | $626.49 |
| Estimated Annual Dividend | $2,401.24 |
The capital allocation for the week of 08/15/2021 to 08/21/2021 will be used to add to our position in Lockheed Martin Corp. (NYSE: LMT)
LMT – Position Update
Since our last check-in on LMT in week 27 of 2021, the company announced Q2 2021 earnings on 07/26/2021. Additionally, the share price decreased 6.16% from $381.49 to $357.98.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 18 years | 18 years | |
| Yield | 2.85% | 2.73% | 2.83% |
| Payout Ratio | 39.55% | 40.7% | 51% |
| P/E | 13.88 | 15.27 | 16.3 |
Q2 2021 earnings report
Did LMT’s latest earnings report raise any warning flags?
Despite missing the consensus analyst estimate by $0.01, LMT posted strong Q2 2021 results. The company grew revenue, net income, and EPS over the same period a year ago. The company saw higher revenue across all 4 segments. Once again EPS grew at a faster rate than net income, and net income growth outpaced revenue growth. Overall, revenue grew 4.99%, net earnings increased 11.6%, and EPS were 12.6% higher compared to Q1 2020.
| Revenue (in millions) | Net Income (in millions) | EPS . | |
| Q2 2020 | $16,220 | $1,626 | $5.79 |
| Q2 2021 | $17,029 | $1,815 | $6.52 |
| % Change | 4.99% | 11.6% | 12.6% |
Additional noteworthy developments during the quarter:
- Q2 2021 included a loss of $225 million, $0.61 per share, in the Aeronautics segment related to performance issues on a classified program. (Comparatively, Q2 2020 has a non-cash impairment charge of $128 million, $0.34 per share).
- Royal Australian Air Force selected Lockheed Martin Australia for the next phase of the program to develop a joint air battle management system. (press release)
- Brazilian Air Force awarded the Black Hawk Helicopter Sustainment contract to LMT’s Sikorsky subsidiary. (press release)
Looking ahead, LMT maintained its revenue guidance for the year of $67.3 to $68.7 billion. However, it increased it EPS guidance from $26.40 – $26.70 to $26.70 – $27.00.
Thesis
Why are we adding LMT to the FiveTwenty portfolio?
LMT continues to deliver solid sales and earnings growth. At the same time, the company utilizes its capital allocation strategy to further boosts earnings growth through acquisitions (Aerojet Rocketdyne) and share buybacks.
Furthermore, we see the recent pullback in share price as providing an opportunity to add to our position at an attractive price.
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