All It Takes Is $3,500 Invested in This High-Yield Dividend Stock to Generate $500 in Passive Income Over the Next 5 Years

Core Viewpoint - Lockheed Martin's recent stock sell-off presents a potential buying opportunity for dividend investors, despite challenges from write-offs and a weaker outlook for 2025 [3][12]. Financial Performance - Lockheed Martin experienced a significant drop in share prices by 9.2%, the largest since October 2021 [1]. - The company reported $1.97 billion in write-offs from classified programs in 2024, impacting its earnings per share (EPS) by $6.16, resulting in a full-year EPS of $22.31 [5][6]. - The 2025 outlook indicates lower adjusted earnings and a modest 4.3% increase in sales, with free cash flow projected between $6.6 billion and $6.8 billion, the highest since 2021 [6][7]. Sales and Backlog - Lockheed Martin's backlog reached $176 billion, a 9.6% increase from the previous year, with a book-to-bill ratio greater than 1, indicating strong demand [7][12]. - A significant portion of the backlog is attributed to F-35 fighter jet orders, with 145 units ordered in December valued at $11.8 billion, contributing to a backlog of 408 aircraft [8][12]. Dividend and Valuation - The recent sell-off has pushed Lockheed's forward dividend yield to 2.9%, with potential annual dividend income exceeding $100 from a $3,500 investment [3][10]. - Lockheed's forward price-to-earnings ratio stands at 17, with a dividend payout ratio of less than 50% of net income, allowing for reinvestment and stock repurchases [10][11]. - Over the past decade, Lockheed has reduced its share count by over 25% and increased its dividend by 120%, demonstrating a commitment to returning value to shareholders [11]. Investment Perspective - Despite sluggish growth, Lockheed Martin is considered a reliable dividend-paying value stock, supported by a strong backlog and consistent order inflow [12][13].