Lockheed Martin Corporation (NYSE:LMT) has retreated significantly after powering to 52-week highs early in the year. While the stock is still up about 14% year to date, it is down about 24% from its all-time highs and underperforming the Insider Monkey Billionaire index, which is up about 39%.
Despite the pullback, it continues to benefit from solid financial performance and a record order backlog. These factors reinforce its position as one of the best aerospace dividend stocks to buy. See our list to see which other stocks made the list.
Lockheed Martin delivered strong second-quarter 2026 results, with revenue rising 11% to $20.1 billion and net income more than tripling to $1.8 billion. The impressive performance was driven by growth in the aeronautics segment, which develops and manufactures advanced military aircraft.
The segment, which also conducts aircraft upgrades, maintenance, and sustainment services, generated $8.11 billion in sales, up from $7.42 billion a year ago. The segment returned to profitability, posting an operating profit of $760 million, up from a net loss of $98 million a year ago.
The company ended the quarter with a record backlog of $230 billion, providing significant visibility into the future. Operating cash flow also rose to $3.2 billion, and free cash flow improved to $2.9 billion from negative $150 million.
Cheap Valuation and Dividend Opportunity
Despite the strong results and solid cash reserves, Lockheed Martin Corporation still trades at a discount, with a trailing P/E of 19x, slightly below the sector average of 20x. Additionally, it trades at a price-to-sales multiple of 1.53x, below the sector average of 1.83x. The low earnings and sales multiple suggests investors are not paying a high premium for a major defense contractor with a large backlog.
It also offers an attractive dividend growth opportunity, having increased payouts for 24 consecutive years. Underlying growth continues to generate significant cash flows, allowing the company to return value to shareholders.
On October 9, the board approved a $3.60 per share dividend, a $0.15 per share increase, underscoring its commitment to shareholder returns. Total dividend payout in 2026 stands at $13.95 a share, up slightly from $13.35 a share in 2025. The stock currently yields 2.81%.
For a deeper look at the stock’s valuation and whether its recent pullback presents a buying opportunity, see Lockheed Martin Corporation (LMT) Is Cheap and Lagging. Should Investors Buy the Dip?
Key Risks to Watch
Despite the impressive performance and focus on shareholder returns, Lockheed Martin Corporation could remain a slow-growing, capital-intensive business facing execution risks and margin pressure. That’s partly because it faces cost overruns and execution risks.
Dependence on the US government as a major customer also exposes it to significant risks if congressional appropriations, procurement priorities, or contract awards change.
Hedge Fund Positioning
While institutional positioning remains constructive, the number of hedge funds holding Lockheed Martin Corporation stock dropped to 75 in the second quarter from 83 in the first quarter. AQR Capital Management trimmed its stake by 9% to $701.49 million, while Citadel Investment Group cut by 11% to $342.1 million.
Meanwhile, short interest remains relatively low. Approximately 2.74 million shares were held short as of September 30, up from 2.69 million shares as of August 31. Short interest of 1.19% suggests that bearish positioning remains limited.
The Verdict
Lockheed Martin offers investors a combination of improving financial performance and a long record of dividend growth. Its relatively modest earnings and sales multiples may appeal to income-oriented investors seeking exposure to the aerospace sector without paying the premium valuations often associated with high-growth technology stocks.
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