Lockheed Martin Corporation (NYSE:LMT) published a press release on October 6, 2023, that they would be increasing the dividend from $3 per share in Q4 to $3.15. The increase adds up to a 5% increase YoY. Some dividend investors might find that somewhat boring. However, the most exciting piece of the press release came in the second half.
The company’s board has also authorized the purchase of up to an additional $6 billion of Lockheed Martin common stock under its share repurchase program, nearly doubling total authorization of the current program to $13 billion for future purchases.”
Lockheed Martin Corporation
LMT is known as one of the better capital allocators, decreasing share count at an impressive rate. While the 5% raise in dividends might not be exciting, the $6 billion in additional buybacks should get any Lockheed Martin’s shareholder’s blood pumping.
This Is a Significant Move in Share Repurchases
Share repurchases, or buybacks, often indicate that a company believes its shares are undervalued. When a company buys back its shares, it reduces the total shares available in the market. This can lead to an increase in earnings per share, often making the stock more attractive to investors.
Furthermore, this aggressive approach to share repurchases shows a confident stance in the company’s financial health and future outlook. For long-term investors, such moves by LMT should be reassuring. Not only is the company committed to returning value to shareholders through dividends, but it’s also actively working to enhance shareholder value through buybacks. This dual approach demonstrates Lockheed Martin’s commitment to its investors and its belief in its long-term growth potential. So, while the dividend increase might seem modest, the broader strategy paints a picture of a company that is both forward-thinking and investor-friendly.
