114-year-old defense stock offers a $3 billion dividend payout in 2026 | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

When geopolitical tensions flare up, defense stocks tend to gain momentum. That’s precisely what happened in the past week.

After the U.S. and Israel launched widespread strikes on Iran, killing Supreme Leader Ayatollah Ali Khamenei and triggering Iranian retaliation that killed three U.S. service members, defense stocks surged.

Lockheed Martin jumped more than 3%, CNBC reported. Northrop Grumman climbed around 6%. European names like BAE Systems and Hensoldt rose roughly 6% and 5%, respectively.

But here’s the thing: Lockheed (LMT) isn’t just a geopolitical trade. It’s a 114-year-old dividend machine with a war chest of contracts and a backlog that would make most companies jealous.

Why Lockheed Martin is more than a defense play

Lockheedtraces its roots to December 1912, when brothers Allan and Malcolm Lockheed founded the Alco Hydro-Aeroplane Company out of a San Francisco garage.

The Glenn L. Martin Company, the other half of today’s Lockheed Martin, was incorporated that same year.

The two companies merged in 1995 to form one of the most dominant defense contractors in history.

Today, the company employs roughly 121,000 people and operates across four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space.

In 2025, Lockheed posted$75 billion in sales, a 6% year-over-year increase, and ended the year with a record backlog of $194 billion. That’s about two-and-a-half times its annual revenue sitting in the pipeline.

Lockheed President and CEO James Taiclet said:

For 2026, management is guiding for sales of $77.5 billion to $80 billion, implying another 5% in organic growth.

Free cash flow is expected to land between $6.5 billion and $6.8 billion.

That matters a lot for dividend investors.

Lockheed Martin is poised to grow its dividends in 2026 and beyond.

Bloomberg/ Getty Images

Lockheed Martin’s dividend math

Lockheed Martin pays an annual dividend of $13.80 per share, with a current yield of around 2.1%. The dividend is paid quarterly, with the most recent quarterly payment of $3.45 per share.

With roughly 230 million shares outstanding, that amounts to approximately $3.2 billion in annual dividend payments to shareholders.

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That $3.2 billion payout looks very comfortable against $6.5 billion-plus in projected free cash flow. LMT is essentially paying out less than half of the cash it generates.

The remainder is allocated to capital expenditures, research and development, share buybacks, and strategic investments.

Here’s a quick breakdown of key dividend metrics for LMT stock.

Annual dividend per share: $13.80
Quarterly dividend per share: $3.45
Dividend yield: Around 2.10%
Payout ratio: About 48%
Dividend growth rate (10-year average): Approx. 12.12%
Dividend frequency: Quarterly

Analysts tracking LMT stock forecast free cash flow to increase to $7.6 billion in 2030, which should support consistent dividend hikes.

The growth story behind the dividend

What makes Lockheed interesting right now isn’t just the yield. It’s the runway.

The defense behemoth recently signed groundbreaking seven-year framework agreements with the U.S. Department of War for both PAC-3 MSE interceptors and THAAD missile systems.

Under the old system, defense contracts were awarded annually, making it nearly impossible for companies to plan long-term investments or ramp production efficiently.
The PAC-3 agreement could triple annual production capacity, from roughly 600 interceptors per year to 2,000.
That kind of scale requires serious upfront investment, but it also locks in revenue for years to come.

Lockheed’s Chief Financial Officer Evan Scott said on the company’s January earnings call that MFC could see double-digit sales growth through the end of the decade, potentially reaching mid-teens in some years.

The F-35 program remains the crown jewel. With 191 jets delivered in 2025, a record number, and roughly 1,200 to 1,300 aircraft already built out of a total program of record of 3,500, Lockheed is only about one-third of the way through the production run.

Nineteen countries currently fly or have ordered the F-35.

Sustainment revenue, the maintenance, parts, and upgrades side of the business, is growing even faster, with Lockheed guiding for approaching double-digit growth in F-35 sustainment alone.

Meanwhile, the company is investing heavily in Golden Dome, the U.S. missile defense initiative, through satellite tracking systems, ground-based radars, and battle management software.

It’s also developing autonomous Black Hawk helicopters, drone wingman technology for the F-22 and F-35, and a new low-cost cruise missile called CMMT.

Lockheed Martin: a dividend built to last

The backdrop matters here. Geopolitical uncertainty is rising. Defense budgets globally are climbing.

And Lockheed is sitting on a record backlog, with multi-year contract frameworks that provide the long-term visibility most industries simply don’t enjoy.

Lockheed Martin has paid dividends continuously since 1986, according to Macrotrends, and the company has grown its dividend at nearly 6% annually over the past five years.

With $6.5 billion or more in free cash flow expected in 2026, a roughly $3.2 billion dividend obligation, and a backlog that extends well past this decade, Lockheed Martin’s dividend looks as solid as the steel in its missile casings.

LMT stock offers something rare: a durable payout backed by real earnings power.

Out of the 14 analysts covering LMT stock, three recommend “buy” and 11 recommend “hold.” The average LMT stock price target is $659, marginally above the current price.