Should You Invest in Lockheed Martin?

PHOTO CREDIT: Lockheed Martin

OVERVIEW

Lockheed Martin Corporation is a company based in the United States. The company develops, manufactures, and sells aeronautical (aircraft and drones), missiles and fire control, rotary and mission systems (helicopters and other systems found on ships), and space. The company sells these products to the United States and countries around the world. It was founded in 1912.

Why You Should?

1. Lockheed Martin is a great reopening play in an investor’s portfolio. The company saw a drop in demand for some of its products from other countries as they focused on spending money on the pandemic instead of defense products. However, once the pandemic is over, the company will see demand for these products rise once again.
2. The Biden administration will positively benefit the company as well. Biden looks to continue to increase defense spending as a part of his infrastructure plan. In addition to this, he looks to sign trade deals with our allies, a possibility for Lockheed to sell more products to other countries. This will benefit the company and its investors.
3. After the United States started leaving Afghanistan, the Taliban came roaring back and took control of the entire country. This further increases tensions in the Middle East and Biden (along with the DOD) will need to have an appropriate strategy when it comes to this region and protecting the United States’ best interests. This might benefit the company with increased demand.
4. Lockheed Martin, along with other defense companies, offers investors a great dividend. At the moment, the company offers a dividend of $10.40, or 3.01%, per stock every year. This makes the company a great investment option for investors looking for a safe and high-yielding stock.
5. Other than the Middle East, geopolitical tensions around the world will continue to rise. For example, China and Russia are becoming more provocative in the areas that surround their territory. Because of these heightened tensions, I do not see a scenario where the United States will reduce defense spending. This will benefit the company and its investors.
6. The defense industry is one of the best industries to invest in. It is filled with company’s that have safe businesses, good dividends, and strong balance sheets and results year over year. Lockheed Martin is the largest defense contractor in the world, something that makes the company a crown jewel in the defense industry.

Why You Should Not?

1. The company faces tough competition in the defense industry. Some of these competitors include Boeing, Raytheon Technologies, Northrop Grumman, and many others. This competition might hurt the company and its investors in the future.

MY OPINION

I think that Lockheed Martin is a great long-term investment due to its position as a good reopening play, positive impacts from the Biden administration, the Taliban in Afghanistan, rising geopolitical tensions, a good dividend, as well as its position as the crown jewel in the defense industry. However, tough competition might hurt the company and its investors in the future.