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Reasons to Add Leidos Holdings (LDOS) to Your Portfolio Now

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Leidos Holdings’ (LDOS - Free Report) commendable budgetary revisions, strong cash flow growth and solid contract inflows will likely boost its performance in the long term.

Contract Inflows

Ongoing contract wins for the company’s cost-effective defense solutions from the Pentagon as well as other U.S. allies are primary growth drivers. In fact, these contracts tend to strengthen Leidos Holdings’ backlog.

At the end of second-quarter 2019, Leidos Holdings’ total backlog stood at $21.7 billion compared with $21.5 billion at the end of the first quarter. Such solid backlog trends indicate outstanding revenue growth prospects for the company in the upcoming quarters.

Improvement in Defense Budget

The company envisions more growth prospects, considering the current U.S. administration’s inclination to increase defense spending. In this regard, it is crucial to mention that the fiscal 2020 defense budget shows 5% rise in spending levels from fiscal 2019’s budget.

Steady Cash Flow & Dividend Hike

Leidos Holdings’ well-defined balance sheet and steady cash flow position provide it significant financial flexibility. This enables the company to reward shareholders with outstanding dividend payouts and share repurchases.

Solid cash flow reserve seems to have propelled Leidos Holdings to make it’s first-ever dividend hike. The board of directors announced a dividend hike of 6%. Such cash deployment strategies bode well for the company’s growth.

Leidos Holdings’ current dividend yield is better than the industry’s average.

Other companies from the aerospace & defense space that hold favorable dividend yield ratio are Lockheed Martin Corporation (LMT - Free Report) , The Boeing Company (BA - Free Report) and Bae Systems (BAESY - Free Report) .

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