High-Yield Stocks Face Dividend Cut Risks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 15 2026
0mins
Should l Buy LMT?
Source: NASDAQ.COM
- Importance of Dividend Growth: According to data from Ned Davis Research and Hartford Funds, over the past 50 years, the average dividend payer in the S&P 500 has delivered a 9.2% annualized total return compared to just 4.3% for non-payers, highlighting the superiority of dividend growth stocks in long-term investing.
- Risks of High-Yield Stocks: While the Global X SuperDividend U.S. ETF offers a nearly 7% distribution yield, its holdings of high-yield stocks face greater risks of dividend cuts, exemplified by LyondellBasell's 50% payout reduction this year, indicating potential flaws in high-yield strategies.
- Performance of Quality Dividend Stocks: The Schwab U.S. Dividend Equity ETF, which invests in 100 high-quality, high-yield dividend stocks, has achieved over 11% annualized returns, demonstrating success in dividend growth, particularly with Lockheed Martin increasing its dividend for 23 consecutive years.
- Shift in Investment Strategy: Investors should avoid selecting stocks solely based on yield, as high-yield stocks often come with the risk of dividend cuts; instead, focusing on ETFs centered around dividend growth, like the Schwab U.S. Dividend Equity ETF, can lead to more robust investment returns.
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Analyst Views on LMT
Wall Street analysts forecast LMT stock price to fall
12 Analyst Rating
4 Buy
7 Hold
1 Sell
Hold
Current: 592.190
Low
430.00
Averages
535.50
High
605.00
Current: 592.190
Low
430.00
Averages
535.50
High
605.00
About LMT
Lockheed Martin Corporation is a global aerospace and defense company. The Company is engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. Its segments include Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft. MFC segment provides air and missile defense systems, manned and unmanned ground vehicles, energy management solutions, and others. RMS segment designs, manufactures, services and supports various military and commercial helicopters, surface ships, sea and land-based missile defense systems, and others. Its Space segment is engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Lockheed Martin Set for Potential Blockbuster Quarter
- Strong Quarter Anticipation: Lockheed Martin's upcoming quarterly report is expected to be a “blockbuster,” with CEO Jim Taiclet excelling in managing government orders, indicating sustained demand and market confidence in the defense sector.
- Surge in Missile System Demand: Cramer highlighted the ongoing increase in demand for missile systems due to the Ukraine war and Israel's defense needs, suggesting that Lockheed Martin will significantly benefit from this trend, enhancing its market position.
- Defensive System Advantages: The company holds a crucial position in key defense projects like the Terminal High Altitude Area Defense (THAAD) and Aegis Ballistic Missile Defense (BMD), ensuring its competitiveness and technological leadership in the global defense market.
- Investment Potential Analysis: While Lockheed Martin shows strong investment potential, analysts note that certain AI stocks may offer greater upside and lower downside risk, prompting investors to choose wisely.
See More
U.S. Stock Futures Dip as Iran Conflict Clouds Market Outlook
- Market Reaction: U.S. stock index futures dipped on Monday after last week's record rally on Wall Street, with the Dow futures down 303 points or 0.61%, as dimming prospects of the Iran conflict prompted investors to curb their risk appetite.
- Oil Price Surge: Oil prices jumped 5% on Monday following Iran's reclosure of the Strait of Hormuz, with U.S. energy stocks rising in premarket trading, as Exxon Mobil and Chevron gained 2% and 1.9% respectively, indicating market concerns over supply disruptions.
- Volatility Index Rise: The CBOE Volatility Index (.VIX) rebounded after falling for eight consecutive sessions, last up 2.25 points to 19.73, marking a one-week high, reflecting increased market anxiety about future uncertainties.
- Earnings Focus: Investors are keenly awaiting upcoming earnings reports from defense giants like Lockheed Martin and RTX, as well as tech stocks such as Tesla, to assess the impact of the Iran conflict on corporate results and the broader economy.
See More
Pentagon Accelerates AI Integration in Defense Contracts
- AI Strategic Transformation: The Pentagon is rewriting defense contracting rules by focusing on building systems that can think and decide rapidly, which is expected to drive job growth and technological innovation within the defense industrial base.
- Key Contractors Rising: Companies like Palantir, Anduril, and Lockheed Martin are treating AI as the central nervous system of warfare, enhancing operational efficiency and ensuring competitive advantages through the integration of real-time command intelligence and autonomous systems.
- Enhanced Data Processing Capabilities: Palantir's Foundry and Gotham platforms transform vast amounts of data into real-time command intelligence, creating an evolving operational picture that has become indispensable infrastructure for all military branches, driving compounding revenue growth.
- Lockheed's Hybrid Advantage: Lockheed Martin achieves cost-effective enhancements by embedding AI into existing fifth-generation fighter jets and missile systems, improving combat effectiveness and maintaining its leadership in defense modernization efforts.
See More
Pentagon Accelerates AI Procurement Strategy
- AI Procurement Pathway: Under Secretary of Defense Pete Hegseth's initiative, the Pentagon has adopted a new software acquisition pathway aimed at accelerating the delivery of critical capabilities and creating thousands of jobs, thereby enhancing the overall efficiency of the defense industrial base.
- AI Budget Transformation: As the Pentagon intensifies its focus on artificial intelligence, companies like Palantir, Anduril, and Lockheed Martin emerge as key beneficiaries, treating AI as the central nervous system of warfare and driving a transformation in defense contracting.
- Real-Time Decision-Making: Palantir's Foundry and Gotham platforms integrate data from satellite imagery, drones, and ground sensors through machine learning models to create a dynamic battlefield ontology, significantly improving commanders' decision-making efficiency and ensuring rapid responses to potential threats.
- Modernization of Legacy Platforms: Lockheed Martin successfully embeds AI into fifth-generation fighter jets and missile systems, transforming traditional architectures into real-time learning systems; this cost-effective strategy maintains its competitiveness in future combat and supports diversification of its R&D budget.
See More
Lockheed Martin and Howmet Aerospace Surge Amid Increased Defense Spending
- Significant Revenue Growth: Howmet Aerospace achieved record revenue of $8.3 billion in 2025, marking an 11% increase, with earnings per share (EPS) rising 32% to $3.71, highlighting its critical role and strong demand in the defense market.
- Increased Defense Budget: The Trump administration's proposal to raise the 2027 U.S. defense budget to $1.5 trillion positions Lockheed Martin, as the lead contractor for the F-35, to benefit significantly, ensuring a steady cash flow and continued dividend growth.
- Dividend Yield Comparison: Lockheed Martin boasts a dividend yield of approximately 2.2%, having increased dividends for 23 consecutive years, while Howmet Aerospace's yield is only 0.18%, showcasing Lockheed's superior shareholder return strategy.
- Market Outlook Analysis: Although Howmet Aerospace shows greater growth potential, its forward P/E ratio exceeds 54, significantly higher than Lockheed's 20.6, indicating that much of Howmet's growth is already priced in, prompting investors to choose wisely.
See More
Investment Comparison: Lockheed Martin vs. Howmet Aerospace
- Howmet Aerospace Growth: Howmet Aerospace reported an 11% revenue increase to $8.3 billion in 2025, with EPS rising 32% to $3.71, driven by critical components operating under extreme conditions, and forecasts 2026 revenue of $9 billion to $9.2 billion, indicating strong market demand and growth potential.
- Lockheed Martin Stability: Lockheed Martin achieved $75 billion in revenue for 2025, with EPS declining 23% to $21.49 due to non-recurring charges; however, its $194 billion backlog ensures revenue stability for the next two and a half years, highlighting its strong position in the defense market.
- Defense Spending Boost: With the U.S. defense budget projected to reach $1.5 trillion by 2027, Lockheed's missile and fire control segment benefits from a $4.7 billion Army contract, further solidifying its cash flow and market share.
- Dividend Policy Differences: Lockheed has increased its dividend for 23 consecutive years, raising it by 5% to $3.45 per quarter, yielding approximately 2.2%, while Howmet's yield is only 0.18%, showcasing Lockheed's advantage in shareholder returns.
See More
Lockheed Martin Set for Potential Blockbuster Quarter
- Strong Quarter Anticipation: Lockheed Martin's upcoming quarterly report is expected to be a “blockbuster,” with CEO Jim Taiclet excelling in managing government orders, indicating sustained demand and market confidence in the defense sector.
- Surge in Missile System Demand: Cramer highlighted the ongoing increase in demand for missile systems due to the Ukraine war and Israel's defense needs, suggesting that Lockheed Martin will significantly benefit from this trend, enhancing its market position.
- Defensive System Advantages: The company holds a crucial position in key defense projects like the Terminal High Altitude Area Defense (THAAD) and Aegis Ballistic Missile Defense (BMD), ensuring its competitiveness and technological leadership in the global defense market.
- Investment Potential Analysis: While Lockheed Martin shows strong investment potential, analysts note that certain AI stocks may offer greater upside and lower downside risk, prompting investors to choose wisely.
See More
U.S. Stock Futures Dip as Iran Conflict Clouds Market Outlook
- Market Reaction: U.S. stock index futures dipped on Monday after last week's record rally on Wall Street, with the Dow futures down 303 points or 0.61%, as dimming prospects of the Iran conflict prompted investors to curb their risk appetite.
- Oil Price Surge: Oil prices jumped 5% on Monday following Iran's reclosure of the Strait of Hormuz, with U.S. energy stocks rising in premarket trading, as Exxon Mobil and Chevron gained 2% and 1.9% respectively, indicating market concerns over supply disruptions.
- Volatility Index Rise: The CBOE Volatility Index (.VIX) rebounded after falling for eight consecutive sessions, last up 2.25 points to 19.73, marking a one-week high, reflecting increased market anxiety about future uncertainties.
- Earnings Focus: Investors are keenly awaiting upcoming earnings reports from defense giants like Lockheed Martin and RTX, as well as tech stocks such as Tesla, to assess the impact of the Iran conflict on corporate results and the broader economy.
See More
Pentagon Accelerates AI Integration in Defense Contracts
- AI Strategic Transformation: The Pentagon is rewriting defense contracting rules by focusing on building systems that can think and decide rapidly, which is expected to drive job growth and technological innovation within the defense industrial base.
- Key Contractors Rising: Companies like Palantir, Anduril, and Lockheed Martin are treating AI as the central nervous system of warfare, enhancing operational efficiency and ensuring competitive advantages through the integration of real-time command intelligence and autonomous systems.
- Enhanced Data Processing Capabilities: Palantir's Foundry and Gotham platforms transform vast amounts of data into real-time command intelligence, creating an evolving operational picture that has become indispensable infrastructure for all military branches, driving compounding revenue growth.
- Lockheed's Hybrid Advantage: Lockheed Martin achieves cost-effective enhancements by embedding AI into existing fifth-generation fighter jets and missile systems, improving combat effectiveness and maintaining its leadership in defense modernization efforts.
See More
Pentagon Accelerates AI Procurement Strategy
- AI Procurement Pathway: Under Secretary of Defense Pete Hegseth's initiative, the Pentagon has adopted a new software acquisition pathway aimed at accelerating the delivery of critical capabilities and creating thousands of jobs, thereby enhancing the overall efficiency of the defense industrial base.
- AI Budget Transformation: As the Pentagon intensifies its focus on artificial intelligence, companies like Palantir, Anduril, and Lockheed Martin emerge as key beneficiaries, treating AI as the central nervous system of warfare and driving a transformation in defense contracting.
- Real-Time Decision-Making: Palantir's Foundry and Gotham platforms integrate data from satellite imagery, drones, and ground sensors through machine learning models to create a dynamic battlefield ontology, significantly improving commanders' decision-making efficiency and ensuring rapid responses to potential threats.
- Modernization of Legacy Platforms: Lockheed Martin successfully embeds AI into fifth-generation fighter jets and missile systems, transforming traditional architectures into real-time learning systems; this cost-effective strategy maintains its competitiveness in future combat and supports diversification of its R&D budget.
See More
Lockheed Martin and Howmet Aerospace Surge Amid Increased Defense Spending
- Significant Revenue Growth: Howmet Aerospace achieved record revenue of $8.3 billion in 2025, marking an 11% increase, with earnings per share (EPS) rising 32% to $3.71, highlighting its critical role and strong demand in the defense market.
- Increased Defense Budget: The Trump administration's proposal to raise the 2027 U.S. defense budget to $1.5 trillion positions Lockheed Martin, as the lead contractor for the F-35, to benefit significantly, ensuring a steady cash flow and continued dividend growth.
- Dividend Yield Comparison: Lockheed Martin boasts a dividend yield of approximately 2.2%, having increased dividends for 23 consecutive years, while Howmet Aerospace's yield is only 0.18%, showcasing Lockheed's superior shareholder return strategy.
- Market Outlook Analysis: Although Howmet Aerospace shows greater growth potential, its forward P/E ratio exceeds 54, significantly higher than Lockheed's 20.6, indicating that much of Howmet's growth is already priced in, prompting investors to choose wisely.
See More
Investment Comparison: Lockheed Martin vs. Howmet Aerospace
- Howmet Aerospace Growth: Howmet Aerospace reported an 11% revenue increase to $8.3 billion in 2025, with EPS rising 32% to $3.71, driven by critical components operating under extreme conditions, and forecasts 2026 revenue of $9 billion to $9.2 billion, indicating strong market demand and growth potential.
- Lockheed Martin Stability: Lockheed Martin achieved $75 billion in revenue for 2025, with EPS declining 23% to $21.49 due to non-recurring charges; however, its $194 billion backlog ensures revenue stability for the next two and a half years, highlighting its strong position in the defense market.
- Defense Spending Boost: With the U.S. defense budget projected to reach $1.5 trillion by 2027, Lockheed's missile and fire control segment benefits from a $4.7 billion Army contract, further solidifying its cash flow and market share.
- Dividend Policy Differences: Lockheed has increased its dividend for 23 consecutive years, raising it by 5% to $3.45 per quarter, yielding approximately 2.2%, while Howmet's yield is only 0.18%, showcasing Lockheed's advantage in shareholder returns.
See More
